Some Texas homeowners are getting an unwanted letter in the mail. The messages are coming from insurers notifying recipients in hurricane risk areas that their homeowners insurance policies will not be renewed, all as hurricane season approaches. This has left some homeowners scrambling to find a new policy before their current one ends.
“It’s just frustrating,” Jeff Hooge told ABC13. “You’d think the insurance companies are there to help you out when you’re in need, but then they cancel and don’t want to pay out.”
A busy hurricane season awaits
This year’s Atlantic hurricane season — which runs June 1–Nov. 30 — has an 85% chance of being “above normal,” according to the National Oceanographic Institute. A busy hurricane season could increase rates even more for those who do keep their policies.
This is particularly true in the Houston market, where insurers are still trying to recoup financially from the May derecho (a severe windstorm connected to several thunderstorms) that killed eight people and caused an estimated $8 billion in damages according to local officials. It’s the latest in a string of severe weather events that are escalating Texas home insurance rates.
Texans already have high home insurance rates
Texas residents pay the fourth-highest home insurance rates in the nation, at $4,437 per year, according to Insurify data. Rates in the Houston area are even higher, averaging $5,511 per year for $300,000 in dwelling coverage with a $1,000 deductible and $5,590 for the same coverage with a $500 deductible. By comparison, the national average cost of home insurance is $2,377.
“The increasing frequency and severity of weather events in Texas are leading to record-breaking insurance payouts and, in turn, increasing premiums,” said Betsy Stella, vice president of carrier management and operations at Insurify. “And insurance companies are becoming more selective about the risks they insure, which is leaving consumers with fewer insurance options in the marketplace.”
Policy culling not exclusive to Texas
While some Texas residents are getting letters notifying them of their policy’s non-renewal, the practice isn’t exclusive to the Lone Star State. California resident Beth Pratt saw her relationship with her insurer of 31 years end last year via a cancellation letter. Pratt’s home is in a danger zone for potential wildfires.
“I get [that] companies need to make money,” she told NPR. “I have no problem with that. Increase my rate. But to just drop people — you know, it’s scary. It leaves us feeling extremely vulnerable.”
Others simply lose their coverage as their insurer leaves the state. State Farm announced earlier this year it won’t renew 72,000 policies in California, and other insurers, including Farmers and Allstate, have also pulled back in the Golden State.
Florida, meanwhile, is facing even more dramatic insurer turnover. The state has lost 11 insurers to liquidation since 2017 — and five in 2022 alone. Eight new insurers are set to begin operating in the state, the Florida Office of Insurance Regulation has reported.
All this has caused Citizens Property Insurance Corporation, the state’s insurer of last resort, to take over 1.4 million policies in Florida, making it the state’s largest insurer in terms of policies written.
What’s next? Navigating fewer options for homeowners
Texas homeowners who receive a cancellation notice have precious little time to find a new policy.Policies must be active for 30 days before policyholders can file a claim, and, with hurricane season already here, the clock is ticking. As those seeking new coverage begin the search, insurance experts caution that paying attention to the fine print is every bit as important as the coverage limits and premiums.
“Unfortunately, a lot of people don’t understand what they have coverage for until they go through an event,” insurance adjuster Art Jansen told ABC13. Many companies add coverage clauses to the fine print of contracts which many policyholders don’t read, he added.
Texas residents who have trouble securing private coverage on their own can research their options with the Texas FAIR Plan Association.
