Insurance coverage is becoming more expensive because of natural disasters in the past
Homeowners insurance rates are on the rise in Texas, and natural disasters may be the cause. The state has not been hit by a major hurricane in six years and devastating wild fires have not been seen since 2011. Despite the apparent lull in catastrophe, rates for insurance coverage continue to grow. This has to do with the lasting impact of natural disasters and how they affect the insurance industry.
Texas is prone to disasters and insurers must recover from losses
The state is prone to natural disasters, according to State Farm spokeswoman Patti Kelly. Many of the homeowners in the state are exposed to natural events, such as hailstorms, hurricanes, and wildfires. Over the past few years, the volume of claims, as well as their cost, have increased, placing more financial pressure on insurance companies operating in the state. In order to accommodate the higher volume of expensive claims they are receiving, insurers have been raising rates on the coverage that they provide.
Prominent insurance companies are raising rates on coverage throughout the state
Rate increases vary from one insurer to the next. State Farm policyholders have seen their rates grow by an average of 9.8%. Farmers Insurance and Allstate customers have seen their rates increase by 15% and 6.5%, respectively. Insurers are attempting to recover from the losses they saw from natural disasters in the past and raising rates on coverage is one of the only sure ways to do so.
Some policies could be expensive because of how they are classified by insurance companies
Texas is home to the third highest homeowners insurance premiums in the U.S., behind Florida and Louisiana. The National Association of Insurance Commissioners suggests that rates in Texas may be artificially high due to the classification of some homeowners insurance policies. On average, the premium for homeowners coverage in Texas is $1,578. Some properties are in particularly risk-prone parts of the state, which could have a significant impact on the overall cost of the policies that are meant to protect them.