BY HALEY MCLEOD
The setup
Factors in determining home insurance rates
According to the Texas Department of Insurance, insurance companies use several factors to calculate a customer’s potential home insurance rate. Common factors include:
Living in a natural disaster-prone state and the home’s location
Poor credit history
Multiple past claims
The home’s age, roof age and material
Living far from a fire station
Cost to replace the house
SOURCE: TEXAS DEPARTMENT OF INSURANCE/COMMUNITY IMPACT
Tips for homeowners
The bottom line
A closer look
There are ways to proactively evaluate home insurance costs. Rainey and other brokers offered these tips: Look at multiple reviews and do your research before choosing an insurance company. Don’t just look at the price when shopping. Not all companies are the same, and they may offer different coverage options and have different claims services. The policy isn’t based on how much was paid for the house, but its replacement cost. Reach out to a broker rather than insurance company directly. Even a simple inquiry can sometimes be logged as a claim—potentially affecting future rates and coverage, even if no payout is made. Be aware of differences in percent deductibles and flat deductibles. The trend is for insurance companies to have: A percent deductible for wind and hail, which has increased from around 1% to a base 2% A flat deductible for other perils, which is a fixed dollar amount Be cognizant of claim history, companies are looking back between 5 to 7 years.
“One catastrophic incident is not a $10 million loss anymore; now it’s $20 billion,” said Robert Rainey, an insurance broker in Oak Hill. Rainey said improved satellite imaging technology and local data have contributed to a number of nonrenewals in his area. Imaging showing tree limbs on roofs, for example, can impact renewals. He has noticed a new trend among carriers citing wildfire scoring to limit or deny wildfire coverage— adding to the list of other weather-related disasters that are not typically covered in high-risk areas, like flooding. He said large companies like Nationwide are no longer writing policies for wildfire coverage west of Oltorf Street, which includes neighborhoods like Circle C, Shady Hollow, Scenic Brook and Oak Hill. Rainey said homeowners should weigh when they should file an insurance claim or pay out of pocket. “You have to be smart about when you file a claim,” Rainey said. “Insurance isn’t designed to pay you back. It’s not an investment; it’s protection.”
The last two or three roofing jobs completed by Southwest Austin’s Sendero Roofing were paid for out-of-pocket, owner Manuel Villanueva said. More homeowners seem to be holding off on repairs, hoping a storm will trigger an insurance claim, he said, but insurers and adjusters are getting more selective about what they’ll cover. “[Insurance claims for new roofs] are not as prevalent as it was back in the day. They’re a little bit more strict with what they’ll pay out for,” Villanueva said. Texas also has relatively weak insurance regu- lations, said Ware Wendell, executive director of nonprofit citizen advocacy group Texas Watch. Under the state’s “file and use” approach, insur- ance companies can submit new rates to the Texas Department of Insurance and begin charging them right away, without waiting for approval. That means the department has little time to thor- oughly review the changes or challenge whether the increases are justified before consumers start paying higher premiums, Wendell said. Over the past 20 years, premiums have risen while coverage shrinks—especially with higher deductibles, Wendell said.
SOURCE: OAK HILL INSURANCE GROUP/COMMUNITY IMPACT
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