Residents of Texas are seeing their homeowners insurance premiums grow. The state is home to the third highest homeowners insurance rates in the United States, with the average annual premium being $1,745. The Texas Department of Insurance notes that these premiums have grown by more than 26% between 2010 and 2014. Only Florida and Louisiana have higher homeowners insurance premiums, on average. For some homeowners, premiums are growing by a greater margin than what others are seeing.
Natural disasters are contributing to the rise in homeowners insurance costs
Over the past few years, Texas has experienced several disasters, from droughts and wildfires to severe storms that have caused significant wind and flood damage. These disasters have struck many homeowners and insurers have reported a significant rise in claims payments. These claims have had a financial impact on insurers, from which they have sought to recover from by raising insurance premiums.
Claims payments have caused some insurers to face significant financial losses
According to a recent report from the Texas Department of Insurance, insurers throughout the state sent out approximately $1.8 billion in direct losses to homeowners in 2015 alone. Singular disasters do not have an impact on homeowners insurance premiums, the agency notes, but a collection of these disasters, all occurring within a relatively short period of time, has lead to major financial losses for some insurance companies. Several insurers have issues rate increase proposals, which state regulators must approve before going into affect. Some of these proposals have already been approved, with premiums expected to grow next year.
In order to determine whether they have the best premiums for their coverage, homeowners are being advised to review their policies every year. Studies have suggested that the longer a person keeps their homeowners insurance policy, the more likely it is that they are paying more than their coverage is worth. Finding a new provider, or a different policy from the same provider, may solve this problem.
