Texas Home Insurance Rates Are Sky Rocketing Out Of Control
Are you getting sick of your Texas home insurance rates increasing every year?
This Special Report explains some of the factors that can affect the Texas insurance rates on your home.
There is going to be a surprise waiting for you in your mailbox and it is not the kind of surprise that you are going to like. Texas home insurance premiums are going up this year at a pace I have not seen for more than 20 years!
There are ways for you to minimize the overall impact to your budget and still keep your coverage. However, before we get into that, lets try to figure out why your Texas insurance is sky rocketing.
Stop paying more for your insurance than you need to. Request free high quality Houston homeowners insurance quotes online.
Are the rate increases caused by natural disasters?
Yes, natural disasters can play a major role in the rate you pay for your Houston insurance. Since Hurricane Ike the reinsurance companies are really the ones to blame. Some local Houston insurance companies had no choice but to increase there rates in order to obtain reinsurance.
It's a fact that insurance companies made a lot of money in the stock market during the 1990s.
Insurance companies invest their money just like everyone else. During the 1990's they made money on their investments just like everyone else. In fact, many home insurance companies were willing to write insurance at a loss because they knew they could make it up on investment income.
For most of the 1990's, insurance companies were able to keep your premiums lower than they would have been because investment income they earned more to offset the losses they paid out.
As consumers, we really shouldn't have a problem with that, part of our premium is offset by the insurance companies investments, resulting in lower premiums.
Then the Stock Market started to fall apart in the middle of 1999.
All of a sudden, the investment income fell off, but the losses didn't. Insurance companies were now faced with the prospect of mounting losses if they kept the rates at the low level. One of several options was to increase premiums across the board and increase they have.
No loss discounts and loss surcharges can affect your premiums.
Clients that do not turn in claims make insurance companies lots of money and should be charged lower rates.
Sounds pretty simple doesn't it? Unfortunately, the rule works the other way, too. Insurance companies are going out of their way to give clients without losses discounts and premium credits to reward them for not having a claim.
If you have a claim or two, you can expect to pay a higher premium for a few years. We know no one plans to have a claim, in fact it's a real pain to go through the process, but it's no different than auto rates going up if there is an accident.
One other problem is the size of losses have gone out of sight! We have seen the average size of closed claims in our office go from $2,350 in 1993 to over $6,425 in 2002. The fact is that it just costs more money to make repairs to houses today than it used to.
Deductibles can save you BIG Money!
Back in the days when I first started in the business, homes were insured for $35,000 and the policies had a $50 deductible. In the late 1970 the value of homes headed towards $75,000 and the deductibles went to $100.
By the end of the 1980's a $250 deductible was standard on almost all policies written for homes valued over $100,000. Today, with the values of many homes costing more than $175,000 many of our clients are using $500 to $1,000 deductibles to keep the cost of their insurance down.
If insurance companies want to reduce your premium for not turning in claims, you might as well save even more money by increasing your deductible. While you wont save enough to make up the deductible in one year, you will be surprised how much you do save over a few years.
How much Texas property insurance coverage should I have?
So how much Houston Texas insurance should you have? Basically, unless you want to pay some of the costs yourself, you should insure your home for what it would cost to rebuild it if your residence were destroyed.
How do you find this out? In the home construction world, building costs are calculated on a square foot basis. We can calculate the estimated replacement cost for your home. Give us a call (281)398-9002 and we will be glad to update our records and send you a copy for your review.
Your possessions are also insured on a replacement cost or actual cash value basis. Again, unless otherwise specified, the coverage in your policy is actual cash value.
Homeowners policies also have limits on coverage for such items as jewelry, fine art or collectibles.
- For example, the standard policy will provide a maximum of $1,000 coverage for your jewelry if it is stolen.
- If you have lots of jewelry, fine art or collectibles, you should consider purchasing a special personal property endorsement or floater that provides the coverage you need.
Learn about 8 Ways to save money on your insurance!
Take advantage of multiple policy discounts!
Raise your deductible to lower your premium.
- The deductible is the agreed to amount you are responsible for a claim before the insurance takes care of the rest.
- For example, if you have a $250 deductible and you file a claim for $1,000 in damage to your home. You pay the first $250 and before the insurance company pays the remaining balance of $750.
- The higher the deductible you choose, the more you pay out of your pocket.
- The lower the deductible, the less you have to pay out of pocket.
- Depending on the insurance company, you can save between 12% and 37% by changing a deductible from $500 to $5,00
Newer houses are insurance companies favorites!
- Insurance companies prefer insuring newer homes.
- Recently built homes equals lower premium because there is less likelyhood something will go wrong with the electrical, heating and plumbing systems.
- In addition, the structure itself is in better shape and usually there is a lot less exposure to big trees.
- The newer the home the greater the discount!
- Depending on the age of your house, insurance companies offer discounts between 8% and 15%.
Insure the replacement cost of the house itself and not the land.
- There have been times when mortgage companies want us to increase the amount of insurance to be equal to the mortgage on the property.
- This is not always necessary because you only need to insure the rebuilding cost of the house not the value of the land it sits on.
Don't insure more than you own.
- If you have made a major purchase, you will want to increase your limits of coverage
- On the other hand if you sell some of your belongings you may want to think about lowering the amount of coverage for your contents.
- Pay particular attention to items that are covered by endorsements or added floaters to your policy, items such as expensive jewelry and art work.
Do not leave your house unprotected.
- Smoke detectors, burglar alarms and deadbolt locks are usually worth discounts of at least 2%.
- You can get even bigger discounts, 8% to 15%, if you install a sprinkler system or a monitored alarm system that rings at the police station or a security company.
- Before you install one, check with your insurer to find out what type of systems qualify for these discount and how much you would save on your premium if you installed the system.
If your dog bites, beware of lawsuits.
- If you have a dog or dogs, particularly if it's considered a vicious breed, you will pay more for Texas liability insurance coverage.
- More and more dog bite claims are being presented, which has some insurers unwilling to provide coverage to homeowners who have selected breeds of dog
- For example, rottweilers, pit bulls, dobermans are a few breeds insurance companies may not insure.
- If you are considering getting a dog, keep keep in mind that certain breeds, may cause an increase in your premium.
- Your insurance company might even decide to cancel or non-renew your policy.
Keep Your Credit Score in Top Condition
- Insurance Companies are relying more and more on credit scoring to determine insurance premiums.
- They have found that people with low credit scores have almost three times the losses than people with high credit history.
- Get rid of unused credit cards and pay your bills on time. It will pay off in the long run.
There is more to this insurance game than saving money. It's more important to make sure you, your loved ones and your assets are covered adequately.
It's not a pleasant thought, but insurance is about worst-case scenarios. It's also about peace of mind, knowing that you have the worst-case scenarios covered.
Do you have Texas insurance questions?
If you have any Texas insurance questions I would be happy to provide you an answer. Feel free to contact me anytime by email or phone and I will do my best to answer all of your Texas insurance questions.
We are in the business of managing your insurance protection. We promise that we will be honest with you and try to get you the best insurance coverage for your dollar.
We cant always have the cheapest rates around, but I can guarantee you that we will do everything possible to make sure that you are getting all the discounts you deserve and have your insurance with one of the top insurance companies doing business today.