The High Cost of Homeowners Insurance in Texas

Texas home owners insurance is currently estimated at being a 4.5 billion dollar a year industry. The homeowners’ insurance rates in Texas are notably more expensive than in all of the other states in our country because of both the size of the state itself and due to the exposure to severe weather conditions such as hailstorms, coastal windstorms, hurricanes and tornadoes.  It should be noted that wind and hail damages account for up to 84% of the higher prices of premiums in Texas compared with other states in the US.

Rates VS Premiums

It is important to know the difference between a “rate” and a “premium”.  The “rate” is the base price for insurance, just like the cost of gasoline is based on the price per gallon. The rates are set by the state’s insurance commission and insurance companies must comply with these basic rates when determining their premiums.

The premium is the actual price you pay for your insurance and is affected by several factors.  For example, the amount of your deductible, the actual cost of replacing your house and belongings (this usually rises every year, because of increases in the cost of construction materials) and the amount of coverage you choose will all have an affect the your premium amount.

Shopping for the Best Price

No matter what you are trying to buy, it always pays to shop around.  Even though the rates are determined to some extent by the state government you will still find enough of a difference from company to company to justify shopping around for your insurance. Shopping around may take a little more time and effort, but will be well worth the reward.

Be sure to ask each company what special discounts they have available for things such as adding burglar and smoke alarms and whether any groups you are affiliated with have special discounts available through them.  Other ways to reduce your final insurance price include asking for a higher deductible and updating your home’s electrical work.

Be sure not to over or under-insure your home.  Too much insurance will cost you more than it is worth, especially if you never need to make a claim.  Too little insurance may leave you with a great deal of debt or without the things you need should a disaster ever occur in your home.

Taking the time to learn about Texas home owners insurance can save you frustration and money.  Once you have an understanding of what causes higher insurance premiums you can take steps to reduce those factors and save money.  Although Texas has the highest insurance rates in the country, shopping around and changing things like your deductible can help you get the lowest price possible.

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