According to the National Association of Insurance Commissioners (NAIC), the average cost of Texas home insurance in 2009 was $1409 which was a 28 percent increase over 2008. The next highest state was Florida and Texas was 28 percent higher. The national average is just $804 for home insurance.
Texas has a higher number of claims because of hail, tornado and wind damage. This raises the average cost of insurance in the state. Mold also plays a role. The state legislature passed a law in 2003 requiring insurance companies to reimburse homeowners for mold treatment which increased the overall cost of insurance as well.
On its face, the high price of insurance may seem unfair because Texas’ insurance claims tend to have much less monetary payout compared to states with hurricanes, earthquakes and floods. But there’s a difference. These things are NOT covered under the normal homeowners insurance. In Florida, for instance, homeowners are required to purchase separate hurricane insurance.
Another issue is catastrophe funds. Texas requires it while other large states like Florida and California do not.
This, however, comes as no relief to Texans who constantly see their insurance rates rise by double digits each year.
Elected officials are aware of the discontent among the population. They are currently exploring ways to lower insurance rates or at least keep them in check. One proposal circulating will require larger insurers get the permission of the Department of Insurance to raise rates.
However, the legislature cannot stop the weather related property damage so even if there is relief in future rate hikes, Texans are likely to continue to have among the highest rates in the country.
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