Texas isn’t such a cheap place to live when you factor in insurance costs.
When Maryann McGregor retired in 2020, she and her husband considered downsizing and selling their four-bedroom home in Clear Lake to their adult son. The couple had lived there for nearly four decades, and the house was paid off.
Then their home insurance bills started to skyrocket. Two carriers stopped providing coverage, and Allstate, which had been charging them $3,300 in 2020, is no longer writing new policies in their zip code. Now they’re paying $8,000 for a policy from a little-known start-up. Their wind and hail deductible has jumped to $28,400 — twice what they paid to replace the roof last year.
McGregor worries about burdening her son with the new costs.
“It would be a huge impact on him to have that big insurance bill on top of the tax bills,” she said. “The insurance is more than the taxes now.”
Homeowners like McGregor are struggling in every corner of Texas to keep their homes insured, paying more for less coverage as climate change wreaks havoc on providers.
Home insurance in the state is now among the most expensive in the country, trailing only Florida and Louisiana, according to a Houston Chronicle analysis of U.S. Census survey data. Insurance carriers from Allstate and State Farm to smaller start-ups have responded to the rising frequency and intensity of storms not by pulling out of local markets en masse, as has happened in more regulated states like California, but by jacking up premiums and dropping homeowners in risky areas.
The Texas Department of Insurance recorded a 21% jump in statewide rates last year, the biggest annual spike in at least a decade. In the last five years, rates in Texas have risen faster than anywhere else in the country, based on data tracked by S&P Global.
The Houston metropolitan area has the highest average premiums in the state, according to the Chronicle’s analysis, with communities closest to the coast paying nearly three times the national average for home insurance.
But it’s not just a coastal crisis. Homeowners in Amarillo and Lubbock have seen their premiums surge from one year to the next as wind storms and wildfires rip across the panhandle and West Texas. Rates have soared in Central and North Texas too as softball-sized hail has shredded roofs and tornadoes have destroyed neighborhoods.
In the Dallas-Fort Worth area, home insurance last year ranked among the top 20 priciest in the country, topping every metropolitan area in California and many across the East Coast and Florida.
“We don’t have a healthy home insurance market anywhere in the state,” state Sen. Tan Parker of Flower Mound told lawmakers recently, noting that he was dropped by his provider earlier this year, and is now paying more than three times as much for coverage.
In response, real estate agents say potential homebuyers are backing out of contracts because they can’t afford to add insurance premiums. Sellers are dropping list prices, citing the cost of insurance as the reason.
And homeowners who have paid off their mortgages or inherited their homes are increasingly choosing to opt out of coverage altogether: One in six Texas homeowners, or about 1.1 million households, didn’t pay for insurance last year, according to the Chronicle’s analysis of Census data.
“I’ve never experienced anything like this,” said Luis Leal, the owner of My Insurance Group, an independent agency in San Antonio that manages policies for 6,500 homeowners. “I got into the insurance space right at the turn of the 2008 mortgage crisis. And even that didn’t cause as much turmoil as the last 4 or 5 years.”
There’s a lot more, so read the rest. Short term fixes might include things like more state control over rate increases, subsidies to help people who can’t afford current rates, moving people out of the highest risk areas, and so on. The longer term fix, which gets a lot of play in the rest of the story, is working to mitigate the effects of climate change. Which, given that the Republican Party is opposed to the idea of climate change, will be a heavy lift. One way or another, this is not sustainable.
Call me mean spirited, but I have little to no sympathy for the coastal residents who’ve continually and consistently moved to ‘third row’ home sites from High Island to Port Isabell and, for whatever reason, were shocked when the waterfront through second row houses were blown off their foundations by an inclement weather event. Same lack of sympathy for the folks living 3’ above grade next to a coastal plain river, who choose to rebuild (in some cases multiple times) post-flooding. It’s these massive insurance payouts by companies that’s directly the insurance rates the rest of us are paying, i.e. those who’ve chosen to live higher and drier.
Maybe if the major insurance companies stopped insuring these properties, my premium cost would go down or remain static.
The answer is to self-insure, ie to not insure when that’s an option, ie, you don’t a mortgage.
If the house get destroyed, walk away. Don’t rebuild. You may get to enjoy the house for years and save a lot of premium money. If the house is repairable, compar the cost to the insurance premiums you saved.
The other option (public policy wise) would be to force everyone to get a policy like with 3rd party liability on autos. That will spread the risk and cost, but it’s obviouly coercive and not fair either.