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Homeowners Insurance in Texas

When I first graduated from college, I started working for an independent insurance brokerage firm near Dallas, Texas. My time at this insurance brokerage was very valuable, as I learned the ins-and-outs of selling homeowners insurance in Texas. Although I ran into many different surprises as I learned the nuances of selling insurance, I was still incredibly surprised that Texas homeowners insurance was not only some of the most expensive insurance in the nation, but also was the most unique.

The longer I worked for this agency, however, the more I began to realize that there are quite a few reasons why Texas homeowners insurance is significantly different from home insurance in most other states.

Natural Disasters Keep Texas Homeowners Insurance Rates High

If you've ever lived in Texas, then you are probably well aware of the fact that hurricane and tornado threats are discussed almost every year. Whether it's a devastating hurricane sweeping the coastal region, or a tornado ripping through northern Texas, the natural disaster tally in Texas seems to be higher than that of other states.

If it were just hurricanes and tornados, homeowners insurance in Texas may not be that expensive. The problem is, there are many other natural disasters that "compliment" the major ones. Severe winds often whip through a large portion of the state, causing roof damage to many homes. Hail storms can also be fairly prevalent, causing similar damage to homes and vehicles.

Homeowners Insurance Texas = More Insurer Options

One reason why Texas home insurance is so unique is because there are so many options for homeowners. Due to high premiums, there are hundreds of insurance companies that want to insure homes in Texas, hoping to compete for a slice of the high-premium pie.

For homeowners, this is good and bad. First of all, it's never bad to have more options. More options and more competition usually translates to better prices and offerings to the consumer. This is a huge plus for all who are paying high premiums.

The downside to increased competition is that there are may be companies who have not been fully vetted and are thus not as credible as others. Although a hassle, there is a way around this. Before purchasing a Texas home insurance policy, do the following three things: 1) check the company's AM Best rating for financial stability, 2) talk to family and friends about the company, 3) as a last resort (due to recent complaints against this organization), check the company's BBB rating.

Homeowners Insurance Texas = More Policy Options

It may be the result of competition, or it may just be the result of Texans always wanting to stand out, but Texans have decided to create more home insurance policy options. Most of the United States uses the standard HO options (click here for details on the different HO policy types). Texas has these options, but has also created more options for insurance buyers. These are the HOA, HOA+, HOB, HOC, and HOW.

The Texas policy options are very similar to the standard HO insurance policies you will find across the nation, but there are small nuanced differences between the policies. For more information on these unique policies in Texas, click here.

Keys to Keeping Texas Homeowners Insurance Rates Low

One question that is on the minds of most homeowners in Texas is "how do I keep my insurance rates to a minimum without scrimping on coverage"? This is a great question, and there is an answer. Unfortunately it may not be the answer you're looking for. After studying home insurance in Texas for years, there are a few things I've found that make home insurance less expensive:

  • Buy a new home. When it comes to Texas homeowners insurance, it is almost always cheaper for newer homes. Although insurance companies don't disclose how they derive insurance premiums, my bet is that newer homes tend to hold up better than old ones. For example, a 20-year-old roof is more likely to lose half its shingles in a wind storm than a 1-year-old roof will.
  • Work on your credit. Most home insurance companies in Texas have also determined that the credit you have is an indicator of the claims you file. Although many think it is unfair, this is how insurance companies operate today. Rather than complaining about it, if you work on your credit rating you may see a drop in your insurance premiums.
  • Move to Austin or El Paso. When I say that homeowners insurance in Texas is expensive, that is a sweeping generalization. There are areas of the state that have less expensive premiums than others. Dallas and Houston rates are incredibly high. Rates in Austin and El Paso, however, are relatively affordable and more in-line with home insurance rates in other states.
  • Bundle Your Insurance. When insurance rates are extremely expensive, every penny counts. One way to save 10 - 15% on your homeowners insurance policy is by bundling your home with another insurance product. Most people think you have to bundle home with auto, but that's not necessarily true. You can bundle your home with your boat, life, umbrella, or any other insurance policy you may need.
  • Get Multiple Quotes. As mentioned above, there are hundreds of insurance companies in Texas. Use this to your advantage by getting as many quotes as possible! Start your search by going to the top of this article and click to receive at least 3 - 5 quotes from top companies in your area.

Despite the higher-than-average home insurance rates, Texas really is a wonderful place to live. So while you are shopping for the best home insurance rates, don't forget to submerge yourself in the Texas culture and learn what it really means to be a Texan!

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Last modified: Mon Jan 27 10:57:11 MST 2014