13 Investigates: Houston area homeowners risk ditching insurance amid 'unsustainable' rates
CLEAR LAKE, Texas -- John Cobarruvias fell in love with his Clear Lake neighborhood when he first moved there with his family in 1989.
"It was just a perfect place for us and our kids and over the years, we just didn't want to move," he said. "It's a great place to live, but we're getting to a point where we're going to have to make some decisions. This increase in insurance can't continue. It's unsustainable."
Back in 2000, Cobarruvias said he paid just $750 a year for his home insurance, which had a $500 deductible. Now, he said he's paying $6,000 a year with a $9,000 deductible and the increases keep piling up.
For two years in a row, Cobarruvias said his home insurance company raised his rates by 25% annually and 13 Investigates found he's not alone.
A 13 Investigates analysis of Texas Department of Insurance data shows the number of times insurance companies raised homeowners' insurance more than doubled over the last decade. The state found no issues with a majority of the increase requests it reviewed over the last decade.
Ware Wendell, executive director of Texas Watch, a non-partisan group that advocates for consumers, said part of the problem with the insurance industry is how the system is set up.
"The insurance companies don't have to wait for approval from the Department of Insurance before they start charging rates under our current laws because we've got this file and use system which allows them to file their rates and start using them immediately," Wendell said. "It's up to the Department of Insurance if they identify an overcharge, to then challenge that... We're not seeing that the TDI is doing that very often."
Wendell said one solution to minimize overcharges would be to stop them before they start using "prior approval" versus a "file and use" system.
Wendell said more frequent and severe weather events aren't helping the insurance crisis.
According to the federal government's National Centers for Environmental Information, Texas experienced 20 severe weather events last year alone, from droughts to severe storms and tropical cyclones. Those events combined cost more than $20 billion.
"The cost of materials and labor is going up and up. Inflation is not coming back under control the way that we hoped that it would, so that's a factor as well in terms of how much we're paying for insurance. It has this knock-on effect," Wendell said. "If lumber costs more, then the insurance that you buy to protect your home is going to cost more."
Wendell said many factors go into calculating a fair insurance rate for consumers, including the company's losses and the trends it's seeing in the cost of labor and materials.
"Insurance companies and the Department of Insurance have master mathematicians called actuaries who evaluate all of that data, and they come up with the correct projection for their losses in the next year, and the rates are tied to that," he said. "Where we are seeing a rise in costs, we can expect to see a rise in insurance. My concern is that I don't want that to be higher than it needs to be, and while we want insurance companies to make a reasonable profit in the state, we don't want them to make an excessive profit with a product that we are forced to buy."
Residents paying a home mortgage are required to have home insurance, but they can risk ditching it once their home is paid off.
Robert Dempsey, who lives in the Clear Lake area, said he used to renew his home insurance annually without worrying about losing coverage.
However, a few years ago, he got a notice from his insurance company that they were leaving Texas and would not renew their policy.
"The summer of 2024, we began shopping around to see who we could get for our new insurance carrier and found it to be a lot harder than we were expecting," Dempsey said. "A lot of the companies that we contacted just said they were not writing policies in this area, and then those that were, the prices tend to be really, really high, or they said, 'you know what, you might have to go to the Texas Fair Plan.'"
Lawmakers created the Texas FAIR Plan Association decades ago to provide property insurance to Texans who were denied coverage elsewhere.
More than half of the policies provided by the Texas FAIR Plan statewide are in Harris County.
According to the Texas FAIR Plan Association, at the end of 2024, there were 61,774 policies in Texas. Another 8,556 policies were written for Fort Bend County residents and 6,722 policies in Galveston County.
Dempsey said he eventually found a company that would insure his home at a higher rate than he had been paying.
But Dempsey and other residents we spoke with said they are now considering gambling with the option of not having insurance at all.
"I'm supposed to be renewed in March, and I have a funny feeling it's going to be a real big increase," Cobarruvias said. "If that happens, we may just forego insurance completely, and I'm not the only one doing that either."
Cobarruvias said he's had just two homeowners' insurance claims over the last 30 years, one when Hurricane Ike caused damage to their roof and more recently when a hailstorm caused roof damage.
"We would take that money that we're paying (in insurance) and put it into an account somewhere, and hopefully, after maybe five or six years, we'll be able to cover the cost of repairs," Cobarruvias said. "We haven't had a lot of need for the insurance and you get to a point where you have to make a decision on it."
Although he can choose whether or not to pay for insurance since his home is paid off, Cobarruvias said some residents don't have that option and are struggling to make ends meet due to the increase in cost.
"They're stuck," he said. "It is a problem affecting every single one of us."
1 comment:
I pay a lot of money for Homeowner's insurance. I would estimate that after Hurricane Harvey more than half of the homeowners in Dickinson don't carry homeowners insurance any longer.
Post a Comment