How to Buy Home Insurance Coverage in Texas

The Sunday, May 31, 2009 issue of The Dallas Morning News reports that homeowners in Texas pay the highest premiums in the nation, and they were waiting for the approval of a bill that would retool the Department of Insurance and state regulations. Unfortunately, the House deadline for consideration of the bill passed, which leaves residents in Texas frustrated and angry. It will take two years before the bill can be revisited. In the meantime, the carriers have the green light to continue to charge the highest rates in the country. Expensive premiums in the area are due to the prevalence of tornadoes, hurricanes, windstorms, hail and earthquakes. The average annual premium in the state is $1362.

Unfortunately, homeowners must pay for this type of protection as mortgage lenders require borrowers to obtain a policy as a means of protecting the collateral of their loans. The industry is regulated by state commissions, so the availability and affordability varies by locality.

In Texas, premiums have doubled in some areas while the number of residents whose policies were not renewed has skyrocketed. Even after reforms in 2003, Texas remains the state with the highest premiums, followed by Florida and Louisiana.

In addition to the volatile and violent weather in the area, the emergence of mold claims is another reason why premiums increased. There was an explosion in mold claims and related lawsuits that caused claims to increase nearly 1300 percent between the beginning of 2000 and the end of 2001. Insurer payouts increased eightfold. Mold coverage is now limited or included in a policy only at an additional cost.

Increasing home repair costs at 7% a year also contribute to an average annual increase in premiums of 4%.

Understanding the Basics

A good plan protects you from damage to the following:

• Your dwelling, which is the structure you live in. Coverage would also include any attached garages. A basic policy may also cover damage to other structures on your property such as a shed or swimming pool.
• Your personal property, which includes furnishings and other belongings that you use, wear, or collect. Basic coverage will protect these items from theft or peril-related damages.
• A liability add-on pays for accidents that occur on your property for which you are held responsible.
• Living expenses, in case you have to live elsewhere while your house is being repaired for a claim.

Be sure to read your policy carefully to understand what is included, and what isn't. For example, damage from storms, lightning, fire, and smoke is generally included under a basic policy, but damage from earthquakes or floods is usually excluded, and may require a separate policy.

Like all policies in the United States, these are regulated by state insurance commissions.