Summary: Texans face complex reasons for growing home insurance premiums within the state. Because of evolving weather patterns, changing industry trends, and more, home insurance costs are growing. Overall, you can compare carriers to help save money on expensive coverage. Estimated Read Time: 3 mins
Texas home insurance rates have surged in recent years because of many different factors including climate change and inflation. Several additional reasons such as the insurance industry and statewide crime rates also factor into escalating premiums. Many homeowners in the Lone Star State also forgo home insurance coverage only exacerbating the issue.
While Texas homeowners insurance is expensive, understanding the reasons can help you save on premiums when enrolling into coverage. From changing weather patterns to changing industries, below, we’re taking a closer look at just why Texas home insurance rates continue to rise.
Natural Disasters
You’ll find plenty of natural disasters in Texas ranging from severe thunderstorms bringing hail and tornados, tropical weather along the Gulf Coast, and flooding throughout the center. All of these and more are raising premiums for homeowners.
The diverse landscapes also endure unique challenges, such as wildfires, and sinkholes found along the Permian Basian and Balcones Fault Zone. Changing weather patterns are causing rising tides along a sinking Gulf Coastal Plain to complicate matters further.
Population and Crime
Texas ranks towards the top when it comes to burglary rates at 14th in the nation. There are problems with vandalism and theft and these perils are adding to the risk of protecting your home.
There’s no doubt about it, most Texans are good, hardworking, honest people. However, as populations increase for various reasons, it’s an unfortunately reasonable correlation that crimes such as burglary will also rise as a result.
Housing and Construction Costs
Texas faces challenges beyond natural disasters and a rising population, however, these issues remain tied together due to the real estate market.
Especially in major urban areas such as Dallas, Houston, and Austin, the cost of building a home is going up as construction and inflation rise.
Because it costs more to build a home these days, it means that carriers are going to have to pay more to cover your claims in the event of a loss. Consequently, homeowners bear the burden of elevated premiums because of this economic cycle.
Claims and Lawsuits
Recent trends show a nationwide shift in allowing insured individuals to file bad faith claims against insurers. This trend expands insurers’ vulnerability and considering the history of legal and regulatory hurdles in the insurance industry for Texas companies, carriers are evolving.
Lawsuits concerning weather-related claims bring litigation expenses. Often, these costs trickle down to policyholders in the form of increased premiums. As a result. Overall costs are rising because of courtroom battles even if they involve claims and disasters in other states.
Many Uninsured Homeowners
Lastly, another issue affecting the state of Texas is the large number of uninsured and underinsured homeowners. Despite the state’s high insurance rates, many residents either do not have homeowners insurance or carry inadequate coverage.
In the event of a major disaster or catastrophic event, uninsured or underinsured homeowners may rely on government assistance or disaster relief programs, which can strain resources and even drive up insurance costs for all policyholders in the state.
These factors and more all contribute to why home insurance in Texas is so expensive. By shopping around, you can compare coverage from multiple carriers and find the lowest premium for protecting your property.
Sources:
1. A Sinking Situation In Houston, Texas Gulf Coast, Texas A&M Today. Accessed February 2024.
https://today.tamu.edu/2021/02/08/a-sinking-situation-in-houston-texas-gulf-coast/
2. Researchers warn that changes in the Permian Basin…,New Mexico Political Report. Accessed February 2024.
https://nmpoliticalreport.com/news/researchers-warn-that-changes-in-the-permian-basin-surface-due-to-oil-and-gas-industry-activities-are-leading-to-increasing-number-of-geohazards/
3. Geophysical mapping of Mount Bonnell fault of Balcones fault zone…,SEG. Accessed February 2024.
https://library.seg.org/doi/10.1190/tle35090752.1
4. Bad faith claims against insurers on the rise; how they can remain in good graces, Reuters. Accessed February 2024.
https://www.reuters.com/legal/legalindustry/bad-faith-claims-against-insurers-rise-how-they-can-remain-good-graces-2022-08-18/
5. Burglary rate in the United States in 2022, by state, Statista. Accessed February 2024. https://www.statista.com/statistics/232580/burglary-rate-in-the-us-by-state/
6. Study: Many Texas Households Lack Homeowner’s Insurance, Insurance Journal. Accessed February.
https://www.insurancejournal.com/news/southcentral/2021/07/26/624343.htm