Homeowners in Texas are Seeing Home Insurance Rates Increase
Homeowners in Texas are feeling the squeeze as homeowner insurance rates continue to climb. In a recent NBC 5 Investigates article, they looked at just how dramatic recent rate increases have been across Texas.
Melinda Clifton has seen destructive weather cause hail damage to her roof three times in the last twenty years according to the NBC article. While her insurance paid out each time to replace her roof, her premium has skyrocketed in recent years.
According to the NBC 5 article, Clifton was paying $2,600 last year for coverage. Her premium jumped this year to $8,800. “It’s an unimaginable number,” Clifton said in the NBC 5 article, “I don’t understand it.”
Like many homeowners, Clifton’s policy is paid via her mortgage escrow account and the premium increase pushed her mortgage payment up hundreds of dollars a month.
“I’ve thought, ‘Am I going to have to sell my home? The home I raised my children in,'” Clifton said in the article.
NBC 5 Investigates examined data from the Texas Department of Insurance (TDI) and found that insurance companies have requested approval for double-digit rate increases more than 150 times in 2023. In 2024, insurers have asked for 74 additional double-digit increases. One company requested an increase of 73%.
The data also showed that since 2014, the number of double-digit rate increases requested in Texas has increased by 560%.
While policyholders are certainly suffering due to premium increases, insurers claim the rate hikes are necessary. Texas has been home to more billion-dollar weather disaster than any other state in recent years. Data from the National Oceanic and Atmospheric Administration shows that since 1980, Texas has seen a whopping 79 climate-related disaster events with losses exceeding $1 billion.
Unfortunately for homeowners, a $1 billion in damage can be caused by an afternoon hailstorm. “It’s reality. And it is the reality of the risk and loss,” said Beaman Floyd, a lobbyist representing some of the state’s biggest insurance companies and director of the Texas Coalition for Affordable Insurance Solutions (TCAIS) in the recent NBC 5 article.
Texas faces a variety of risks that can result in premium increases including damaging storms, homes continuing to be built in areas prone to wind and hailstorms, as well as inflation which has pushed up the cost of repairs and replacing roofs.
According to a TCAIS analysis of Texas Department of Insurance data, over the last five years, insurers have paid out more in claims in Texas than they collected in premiums.
Texas is a bit different from many states in that it uses a file and use system. This allows insurers to request a rate increase and then start charging the new rate even before the State Department of Insurance actually reviews it. According to insurance industry lobbyists, this system allows insurance companies to change higher rates when they need to respond to changing market conditions.
While this system works well for insurance companies, homeowners may end up priced out of the state if rates keep climbing to levels that homeowners cannot afford. Consumer groups in Texas would like to see the state move to a prior approval system which requires the insurance commission to approve rates before insurers can charge the higher rate.
Texas lawmakers will be holding hearings this fall about the rising cost of homeowners coverage and how to deal with it. Texas insurance officials urge consumers to shop their coverage often to find the best rates.
According to the NBC 5 article, Melinda Clifton was able to bring her premium down to $3,800 by shopping her coverage which represents a 45% increase over the previous year, but is much less than the $8,800 her previous insurer was quoting.
While it doesn’t happen often, if the Texas Department of Insurance determines that a rate increase is not justified or doesn’t comply with state laws the insurer would need to issue refunds to policyholders.
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