Texas Is No. 2 For Homeowners Insurance Premiums

Published: Thu 07 Jan 2010

Lucas Eichmann

Texans have claimed the No. 2 spot in average premiums that cover the costs of homeowners insurance. A key factor was Florida residents paid even more for their premiums despite a 3 percent annual increase for insurance in Texas.

The comparison was for the years 2007 and 2006, the most recent years studied in the report by the National Association of Insurance Commissioners.

In Texas, the average annual premium for a homeowner's policy in 2007 was $1,448, an increase of $39, or 2.8 percent, since 2006. However, Florida reported an average premium of $1,534, an increase of $148, or 10.7 percent.

As a comparison, the national average premium in 2007 increased 2.2 percent to $822. That means Florida still was 87 percent higher and Texas was 76 percent higher than the national average.

With the incidents of devastating hurricanes that have struck Florida in recent years, it's little surprise to see the state claim the top spot. But the study of Texas includes tornadoes, hail, ice storms and wildfires in addition to hurricanes for causing the type of damage that forced homeowners to file claims and insurance companies to increase rates.

A representative of the insurance consumer group Texas Watch said the weather is not the only reason premiums have gone up. He cited weak state regulation for rates rising and coverage declining. The head of the industry group Southwestern Insurance Information Service countered the Texas market has competitive rates that are kept as low as possible to provide reliable coverage.

Another reason for Texas rates being so high in recent years can be traced to the large number of claims for mold filed by homeowners early in the decade. Legislation that followed the crisis didn't decrease rates as much as promised.

While the recent average rate increase in Texas seemed small compared to Florida's, the period for the study was fairly stable for weather. After that, Hurricane Ike slammed into the coastal counties and was blamed for causing an estimated $10 billion in property damage. Also in 2008, Hurricane Dolly wrecked portions of the state.

Some insurance experts disagree that the hurricanes' damage would put Texas back into first place when it comes to average insurance premiums. However, the study's results don't include the premiums paid by customers of the Texas Windstorm Insurance Association, considered the insurer of last resort. Its coverage area of 14 coastal counties includes most of the properties damaged by Dolly and Ike.