High costs, high mortgage rates, and high property taxes are already issues we face. Now, a new issue confronts the state.
I recently made the decision to purchase our first house with my wife. We’ve been residing in a two-bedroom townhouse in Houston’s Montrose neighborhood for the past two years. I bought it in 2021 while I was still single. Though not the best place for a couple with two small dogs, it was the ultimate bachelor pad. We spent a few weeks looking for a place to call home before settling on a Craftsman-style bungalow with a spacious kitchen, an antique front porch, and a fenced-in yard where our dogs could run around on a quiet street in the Heights, northwest of downtown. We anticipated paying hefty property taxes and a high mortgage rate. When the sellers approved our offer, we were unprepared for the house insurance market that
I began by submitting an application for a new policy with Homesite, a partner of GEICO, the company I use for my auto insurance, as they already insured my townhouse. Refused. I then tried a comparison website that claimed to look through over a hundred insurance providers to locate the greatest offer. Experian, Liberty Mutual, and Progressive sent estimates in response, but when I followed up with them, I received three additional denials. My past certainly worked against me: in the previous three years, I had filed two claims on my townhouse, one for a leaky window and one for a plumbing problem. As I had anticipated, my home insurance price increased following those claims, but it was not canceled.
Our insurance broker finally located two possibilities for us. Wellington Insurance, a Fort Worth-based company, provided a coverage for $5,773 per year, which is more than double the $2,150 national average. The Texas Fair Plan, a last-resort insurer formed by the Legislature in 1995, provided a plan for $4,382. (Homeowners who have had at least two other carriers reject their application are eligible for the Fair Plan.)
My spouse and I felt uneasy. Although the A/C, wiring, and plumbing of our 1920s-era Heights bungalow had all been completely restored, the bungalow itself had not. In 2012, a new roof was erected by the previous owners. The residence was located miles outside of the 500-year floodplain and had never flooded. I quickly discovered that I was not alone: Texas is currently experiencing a serious house insurance crisis. Prior to the Texas grid failure during Winter Storm Uri in 2021, which left the majority of the state without power and resulted to over 500,000 insurance claims as well as damages totaling over $10 billion, Texans were already paying some of the highest rates for home insurance in the nation.
I put out a call on X last week seeking homeowners in Texas who had comparable experiences to mine. Numerous people replied. A homeowner in Austin informed me that following a 40 percent hike in 2023, his premium increased by 80 percent this year. A homeowner in Houston received a quote for a premium exceeding $8,600 for their roughly $1 million property, which is a 60% increase from the prior year. Insurance companies have reportedly threatened to cancel policies if homeowners don’t rebuild their roofs, remove all of the trees from their property, or replace all of their galvanized steel pipes with PEX pipes.
Texas saw the largest increase in insurance premiums last year, rising 23 percent, more than doubling the 11 percent national rate increase, according to an S&P Global report. According to experts, Texas’s recent spate of natural disasters and high inflation—particularly in the cost of building materials—are to blame for the alarming numbers. The National Oceanic and Atmospheric Administration reports that, between 1980 and 2023, Texas had an average of four natural disasters annually, including storms, tornadoes, wildfires, floods, and winter storms, with damages exceeding $1 billion.
These kinds of calamities have occurred far more frequently in recent years. Texas experienced eleven billion-dollar events year on average between 2019 and 2023, including sixteen in 2023 alone.
Throughout his twenty-year career, Leash Yu, managing director of Houston-based insurance broker Higginbotham, claimed that the past two years have been the most difficult. He informed me, “I’m dealing with clients who haven’t been renewed or who get rate increases of thirty percent every year.” “It is really hard to find carriers who want to insure people who are buying houses.” The cost of skyrocketing insurance has prevented a number of Yu’s clients from buying properties. A homeowner was quoted a $50,000 premium with a $250,000 deductible for a $3 million property. (He withdrew from the deal.) That’s just the current state of the market, but it’s very wild, Yu remarked.
