The Average Cost of Texas Home Insurance Explained
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.
The reason the average cost of Texas home insurance is so high is because of the number of claims due to hail, tornado and wind damage. There also is the issue of mold. In 2003, the state legislature passed a law requiring companies to pay out for mold treatment. This increased the overall cost of homeowners insurance as well. While both mold and weather damage are low-ticket items, there are a lot of them so it adds up.
You may think that this is unfair because other states have hurricanes, earthquakes and floods. But, these are not covered under normal homeowners insurance policies. People who live in areas where these natural disasters occur must buy separate insurance whereas the Texas problems are covered under the normal policy.
Texas also has catastrophe funds included in the insurance which states like Florida and California don’t have.
But Texans don’t see any relief in these cold hard facts. In fact, what they do see is that their insurance rates have been rising by double digits year after year.
The state legislature is not blind to what is going on. They are looking at ways to lower insurance rates. For instance, one proposal requires that the largest insurers get permission from the state to increase their rates. They do, however, have to be careful. If they push the insurance companies too far, they might respond by not offering any coverage in the state. That would be worse than having high insurance 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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