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Old 01-14-2012, 08:55 PM
 
Location: Flower Mound TX
94 posts, read 250,666 times
Reputation: 98

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All:

We are getting ready to purchase a new home in the northern burbs of Dallas, in Denton County- we won't spend more than $750k... In prep for this, I have been getting homeowner insurance quotes that are pretty big, at least compared to what I have had in other regions of the county...

I am a finance and accounting guy, so I understand the basics of underwriting a HO policy, (claims history, credit history, income, total book of business you give the firm, policy deductable amount, etc) and the related umbrella liability policy, etc...

That said, having only owned homes in New England, Mid-Atlantic and Mid-West, and having had 15+ yrs with the same insurance company for all of my needs (Chubb) and after finding out that Chubb does not write in Texas, the general quotes for higher-end coverage are more than double that which I paid in the other areas where I have lived, for homes that were more expensive....

So, am I led to believe that the entire state of Texas gets hit for the increase risks that the coastal regions incur? or is it the level of / lack of regulation that we have in the state, maybe something else? or all of the above?

I know that whatever drives the price, I will have little control over what I end up paying for the coverage my family needs, but I'd at least like to understand the basis thereof

Thanks in advance

RJ
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Old 01-14-2012, 11:04 PM
 
27,453 posts, read 44,947,050 times
Reputation: 14041
said it once (more than once actually)
the state insurance board is filled by appointees by the governor
they are tilted to support insurance company interests vs those of residents of the state in general

there is a good deal of hazardous weather damage in TX from tornados, hurricanes, hail storms but a good deal has been written by investigative journalists about the fact that TX premiums are higher than they need to be even given the hazardous weather situations....

basically people in TX pay more for similar/less coverage because the state allows the insurance companies to get away with offering those levels of coverage

I suggest your contact an independent agent to price your policy coverage needs
we use State Farm mainly because we have always used State Farm--and we have filed claims and had what we think is fair treatment--including a run when our son was first learning to drive and he was involved in 3 separate accidents where he was either at fault or dunned by someone with no insurance coverage...and they still kept us as clients...
I know there are other people who have used them and are unhappy with their coverage/prices--and I don't think they are the cheapest we could probably get
but inertia is strong force in our lives...
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Old 01-14-2012, 11:05 PM
 
Location: Aurora, CO
6,150 posts, read 9,439,786 times
Reputation: 8810
Quick and dirty? You go to the agent, they bend you over the table, and when they're done you give them a "thank you sir, may I have another?"

Homeowner's rates in Texas are exorbitantly high.
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Old 01-15-2012, 12:48 AM
 
Location: Dallas, TX
2,346 posts, read 5,792,682 times
Reputation: 2284
To get my premium to a reasonable level, I carry a policy with a 2% deductible. That way, I'm covered if the place burns down or a tornado hits it, which is all I really need the insurance for. In my case, I can handle the risk of a $5K or $10K loss myself. If you're buying a $ 3/4 M house, you're probably in a similar financial situation.

Keep in mind the purpose of insurance - to hedge against events that would bankrupt you, not events that would sting for a couple of months. At whatever level you're buying it, insurance is just another casino game, with odds worse than the stingiest slot machine. Don't waste money buying a higher level of coverage than you need.
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Old 01-15-2012, 07:44 AM
 
Location: Grapevine, Texas
9,505 posts, read 19,506,212 times
Reputation: 6628
Quote:
Originally Posted by ROckjaw View Post
All:
So, am I led to believe that the entire state of Texas gets hit for the increase risks that the coastal regions incur? or is it the level of / lack of regulation that we have in the state, maybe something else? or all of the above?
It's not just the coastal regions that get home damage. Everywhere in the state is subject to large hailstorms that ruin roofs, windows, etc. We also get wind damage from microburst winds (similar to mini tornadoes). Plus, the regulatory environment in Texas lets the insurers get away with charging such crazy premiums! And since they are based on the value of your home, the more house you buy, the higher the premium!

Welcome to Texas...
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Old 01-15-2012, 07:51 AM
Status: "Impeach "The Bareback Don"" (set 15 days ago)
 
Location: Katy,TX.
3,467 posts, read 6,813,070 times
Reputation: 3183
Bend over
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Old 01-15-2012, 08:18 AM
 
Location: Purgatory (A.K.A. Dallas, Texas)
5,010 posts, read 12,810,577 times
Reputation: 2414
I believe the national average is something like $800 a year or so. Expect to see quotes around 2.5 to 3 times that.

Thank Governor Goodhair and his need to please the insurance industry...everything insurance-wise in Texas will be several times more expensive than anywhere else.
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Old 01-15-2012, 08:48 AM
 
1,256 posts, read 3,179,434 times
Reputation: 931
Quote:
Originally Posted by getmeoutofhere View Post
I believe the national average is something like $800 a year or so. Expect to see quotes around 2.5 to 3 times that.

Thank Governor Goodhair and his need to please the insurance industry...everything insurance-wise in Texas will be several times more expensive than anywhere else.
So what's the cost of insuring a home that's 750K?
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Old 01-15-2012, 10:20 AM
 
Location: Aurora, CO
6,150 posts, read 9,439,786 times
Reputation: 8810
Quote:
Originally Posted by pinipig523 View Post
So what's the cost of insuring a home that's 750K?
I paid $1200 a year to insure a $185,000 house. YMMV

Contrast that with the $300,000 house I insured in Denver (where tornados, floods, hail, wind, and snow are all players) for $600 a year.
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Old 01-15-2012, 10:36 AM
 
Location: Dallas/Ft. Worth, TX
1,855 posts, read 5,672,460 times
Reputation: 3060
Quote:
Originally Posted by ChristieP View Post
It's not just the coastal regions that get home damage. Everywhere in the state is subject to large hailstorms that ruin roofs, windows, etc. We also get wind damage from microburst winds (similar to mini tornadoes). Plus, the regulatory environment in Texas lets the insurers get away with charging such crazy premiums! And since they are based on the value of your home, the more house you buy, the higher the premium!

Welcome to Texas...
ROckjaw,

There are many perils statewide that go into creating the premium rates here. The problems that occur in the coastal regions are just one of them. I just spoke with my own Agent two weeks ago and was advised that they have been unofficially told by the underwriters that rates ARE going up this year. The underwriters have not given the Agencies any idea of how much but just getting the notice was concerning to them. Much of that increase this year will apparently be blamed on the drought damages and resulting widespread wild fires. If you would like more information about insurance rates, etc., you can check the Texas Department of Insurance (TDI) WEB site at Texas Department of Insurance Home Page .

ChristieP,

Unfortunately the rates are not based on the value of a home. Instead they are based on the "Reconstruction Cost" of the home. My insurance company has calculated the reconstruction cost at literally twice the market value of the home. From what they have calculated I can buy a brand new home, in a nice location, 150% - 200% of the size of mine, with all of the nice features and amenities mine does not have. If it occurs that my home is a loss and I have to reconstruct it, I can demolish and haul off the rubble, rebuild the same size home with every amenity available, on my current lot, and still not hit the insurance companies reconstruction cost estimate.

Another problem we have here in Texas with the insurance laws are our elected officials reluctance to control the insurance companies. Over the past few years insurance companies have been doing away with the set deductible amounts ($500, $100, etc.) and are moving, or moved, to a percentage based deductible (1%, 2%, etc.). I used to have a $1000 deductible on a $300K reconstruction cost estimate. Now with a 1% deductible that has raised the deductible amount to $3000. Neat trick by the insurance companies wasn't it? Now they are not only paying less if a claim is made but also having less payouts to begin with if the repair costs are below or very near the deductible. With the use of the CLUE database I won't bother even calling my insurance company if my loss is only $3500. Why would I want to be put in a database that can penalize me in the future just to get $500 back from an insurance policy??

To all that are reading,

If the consumers in this State will make their frustrations and displeasure's heard then just maybe the insurance companies can be better controlled? When you voice your displeasure don't beat up on your insurance Agent as they only sell the policies and have no control over what the underwriters do. Don't beat up on TDI as they only enforce the laws and regulations and can not change them. I've had many dealings with TDI and they are very good people who will do whatever they can, within their authority, to help you! They can only suggest changes to the laws and regulations and do not have the direct authority to change them.

You need to beat up on your elected officials as they are the ones that can change and improve the control over the ridiculously skyrocketing insurance costs and coverage limitations! It is our elected officials that are purposely turning their heads and refusing to deal with the problem. While many people blame the Agents and other government offices for the problem they do not realize it is the elected officials who are at fault for it!

Remember the black mold scare in 2000 - 2003? Our elected officials allowed insurance companies to destroy your coverage against something that was not as widespread as they claimed. After that your exclusions and limitations ballooned with respect to those areas, and your premiums increased for the reduced coverage. Don't be surprised if in the coming years the insurance companies try to use the drought and wildfire conditions to again severely limit coverages.

Speak up and act now by beating up on your elected officials or it will be too late after it happens!
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