AUSTIN (KXAN) — Texas is the third most expensive state for homeowner’s insurance, with annual premiums averaging out to be $1,745 a year, and costs are expected to climb even higher.
According to the Texas Department of Insurance, the average premium price for a homeowner’s insurance policy jumped more than 26 percent from 2010 to 2014. At $1,745 a year, only Florida and Louisiana rank higher than Texas.
“There is a good chance that your rates may have gone up because of all the other damage,” said Mark Hanna, spokesperson for the Insurance Council of Texas. “Texas is just a violent state when it comes to weather. We literally have just about all of the different catastrophes that could occur,” said Hanna.
From droughts and wildfires to severe storms that bring strong wind, hail and flood waters—Texas weather swings from one extreme to the next. “Hail, rain, floods, we get a lot— no question,” said Richard Powell.
Powell has lived at his home in Austin for 15 years and so far, he’s been lucky. His house hasn’t been hit by any bad weather. Powell hasn’t had any major damages to report claims, but that hasn’t stopped his rates from going up.
“I don’t think that we’ve had a 26 percent increase in insurance disasters,” Powell said,
A report from the Texas Department of Insurance shows that in just the first half of 2015, insurance companies in Texas sent out nearly $1.8 billion in direct losses to homeowners. “Any single weather event does not directly impact our insurance rates,” said Jerry Hagins, with the Texas Department of Insurance.
The TDI must approve any increase to premium prices and Hagins said insurance companies look back at 10-20 years determine the average of insured losses. Insurance companies build the average cost of disasters and the possible costs of future disasters into premium prices. Hagins said that Texas sees a lot of perils and that the weather events tend to even out over time.
For the best rates, Hagins said people should review their policies every year. “It does pay to shop around, just because you’ve had the same insurance company for a long time doesn’t mean you have to stick with it,” Hagins said.
Studies suggest that the longer a customer sticks with the same policy, the more likely it is that the customer is overpaying for homeowner’s insurance.
Hagins said premium rates are climbing all across the country, and the prices in Texas are climbing at a slower pace than most other states. “This year has just been a lot rougher than others,” Hanna said. “It puts pressure on the raising of the rates of insurance.”
Hanna said it’s hard to predict what prices will look like next year, but he also recommends people shop around because the state’s competitive market can prevent another big jump in premium prices.