What State Insurance Plans are Doing to Your Texas Homeowners Insurance

What State Insurance Plans are Doing to Your Texas Homeowners Insurance

 

Before long residents of coastal towns won't be able to afford their investment in the coastal towns.

Have you noticed that the rates on most Texas homeowners insurance plans are going up? That it's getting harder and harder to find good coverage for your home? And that finding a home insurance provider that will protect your home from the windstorms and floods that plague the coastal regions is all but impossible if you live on the Gulf?

Welcome to the new revolution in Texas homeowners insurance. The state plans are taking over.

When state funded Texas home insurance in the form of the TWIA (Texas Windstorm Insurance Association) was created it existed solely to pick up the slack in an emergency and to encourage development to continue by providing insurance for high risk areas that would have died off otherwise. There are some parts of Texas that private insurance won't touch with a ten foot pole!

Now, however, in the wake of Hurricane Katrina and the increasing awareness of the potential for huge losses in concentrated areas private insurers are backing away from homes in these high risk areas, pushing them to find state insurance instead. And so the "insurer of last resort" becomes the primary provider. There's only one way this trend can end.

These high risk, last resort insurance providers were intended to offer low cost Texas homeowners insurance to residence along the coast, with taxpayers and private insurers throughout the state helping to soak up the loss. These companies operate with a major deficit, and the amount of money they earn in premiums every year is just a scratch on the surface of the expenses that follow in the wake of a storm like Katrina.

If disaster really struck, could state home insurance cover the damages? Probably not.

With the responsibility being lifted off of private insurers to provide protection for these high risk areas, state insurance providers that were never meant to bear the primary burden of these types of storms are going to be left floundering-and homeowners are going to be forced to accept mediocre insurance coverage from a Texas homeowners insurance provider that may or may not be able to compensate them for their losses.

What can coastal residents do about it? Herein lies the fun of bureaucracy. Not much. The best thing that you as a Texas homeowner can do is spread awareness. Let people know what's happening. You could be the one to turn things around. In the meantime, be prepared to fight for your right to be insured.

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