Texas Homeowners Insurance
Why are Texas homeowners insurance rates rising?
We are seeing this across the industry. The homeowners insurance rates are being driven by the frequency (how often) and the severity (Average dollar payout) per claim. Both of these factors are up.
On Texas home claims costs, the frequency and severity of weather-related claims has set state records over the past three years. Most home insurers in Texas, have been running a property insurance loss ratio in excess of 120%. Meaning for every $1 they are taking in; they are paying out $1.20.
On auto claims, the cost of labor and materials to repair the newer cars is up, legal costs to litigate suits from accidents is up, and medical costs are increasing every year. Like property insurance, the auto claims frequency and severity are trending higher.
So, the continuing higher cost of Texas homeowners insurance claims that the carriers are incurring is what is forcing the carriers to make adjustments in order to be able to fund current and future claims. This is what all our carriers are reporting to us. (Very similar to health insurance, even though you or I do not go to the hospital for a large expense / visit paid by our health insurance policy, if the total cost of health insurance costs increase, so do the rate table for everyone on the plan.)
As a Frisco Texas Homeowners Insurance Agency, we are seeing the following rate changes this year with all carriers:
Average Rate Table Changes:
Auto: Average increase is 20% (some are higher).
Home: Average increase is 15% to 25% (although we have seen some go up by 30% to 40%).
When will the rates level out? If the Texas weather calms down for a few years in a row, this will allow the claims cost to level out, and should result in a leveling out of homeowners insurance premiums in Texas.
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