What You Need to Know About State Bureaucracy and Your Texas Home Insurance

What You Need to Know About State Bureaucracy and Your Texas Home Insurance

The regions along the coast are among the most beautiful-and most at risk.

It seems like every time you look into the possibility of purchasing a Texas home insurance policy in today's high pressure insurance environment it's increasingly difficult to find coverage in those hard to reach places along the coast. You'd think hurricanes that did millions of dollars in property damage blew through there every day the way many private insurance companies shy away from offering coverage to those areas!

While they're certainly not an everyday occurrence there have been enough high powered corporate style hurricanes blowing through the Texas coastal regions to make even the bravest insurance provider quake in their shoes at the thought of having to offer those homes full coverage. In the wake of Hurricane Katrina private Texas home insurance providers are more aware than ever of the risks associated with providing widespread coverage in a high risk area.

Millions of dollars in homeowners insurance claims doesn't look good on a profit and loss statement, so most Texas home insurance companies will avoid that expense whenever possible-and in exchange, they push the pressure of insuring these high risk areas of the state (primarily those that border the Gulf of Mexico) onto state homeowners insurance providers that were never meant to carry that kind of burden.

Insurance providers like the Texas Windstorm Insurance Association (Texas's answer to the rising trend in uninsurability) were meant to be a last ditch resort for Texas residents to ensure the growth of new business along the coastline-a move that's obviously been successful, since cities like Galveston are thriving despite their shady history and even shadier risk margin. A little too successful, perhaps, since many private Texas home insurance providers are choosing to jump ship, making it impossible for Gulf residents to buy a home insurance policy and dumping the responsibility onto the shoulders of an insurance provider that was never meant to carry that heavy a burden-and doesn't have the resources to do it if they wanted to.

Agencies like the Texas Windstorm Insurance Association (TWIA, for those who get sick of repeating that mouthful over and over again) charge a very small premium for their coverage and make up for it by asking private homeowners insurance companies and taxpayers to help pick up the slack. That means that a) They still rely heavily on private insurance to cover those individuals that are not living in an area that's virtually guaranteed to be a victim of mass destruction, and b) The amount of money they pull in through their premium payments isn't enough to pay for the destruction hurricanes like Katrina leave in their wake.

In other words, they're in a sinking ship and taking on water fast.

It's important that residents not find themselves falling victim to an insurance system that can't adequately guarantee its ability to provide for their needs, and the best way to do that is to seek private insurance in as many cases as possible. Texas home insurance providers are trying to hand off the responsibility to the TWIA, but they can't dodge the issue entirely. Don't let yourself be a victim of a cycle that can only end in disaster.

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