Texas lawmakers and the state’s insurance regulator are investigating the practice of insurance bundling, specifically whether companies should be able to force customers to combine their home and auto insurance policies.
Bundling, which often provides consumers with discounted rates, is typically optional. However, the Texas Department of Insurance (TDI) reported receiving nearly 40 complaints as of early December, alleging that some insurers are requiring customers to add an auto policy to renew their homeowners insurance.
Last year, NBC 5 Responds reported a situation involving a North Texas consumer who received a nonrenewal notice from Farmers Insurance. The notice stated the homeowner’s policy would not be renewed unless an auto policy was also purchased through the same company.
“This is strong-arming, almost trying to hold me hostage into staying with this particular company,” shared Sally Little of Azle with NBC 5. Little also mentioned that she sought alternative options, ultimately determining that bundling would not be advantageous in her situation.
Lawmaker Response
State Senator Royce West of Dallas has introduced Senate Bill 213, which aims to prevent insurance companies from making the purchase of both home and auto policies from the same provider a requirement for coverage. On Tuesday, a Senate Committee on Business and Commerce heard testimony from two consumer advocacy groups. They voiced concerns that such practices limit consumer options when shopping for the best rates.
“If they’re forcing you to get their auto policy in addition to your homeowner’s policy, they have less incentive to keep those auto rates in line. It can also disadvantage smaller insurance companies when the 800-pound gorillas come in and do this,” said Ware Wendell of Texas Watch.
Ann Baddour of Texas Appleseed added, “It’s anti-competitive behavior because it’s forcing consumers to make a choice rather than going to the market and looking at their options and choosing what works best for them.”
In response to inquiries from NBC 5 Responds, Farmers Insurance stated in an email, “We do not require homeowners customers to purchase a companion auto policy; as such, this legislation is not applicable to our current guidelines.” While this clarifies the current Farmers guidelines, the proposed legislation, according to Senator West, would apply to any insurance company engaging in such practices.
Farmers also indicated that customers with home policies nearing renewal can proceed without purchasing an auto policy.
Senator West believes his bill has already had an effect. “I think that Farmers got the message. We want to make sure that other insurance companies get the message,” West said. “Here’s the deal, if you’re not doing it, then you don’t have anything to worry about.”The proposed legislation, as West clarified, will not prevent insurers from offering bundled policies.
A spokesperson representing the Insurance Council of Texas, an industry trade group, said, “We look forward to continuing our work with Sen. West’s office to develop something that will be good for consumers and still make Texas a strong and competitive market.”
The Texas Department of Insurance has also put forth a proposed rule that would ban insurance companies or their agents from conditioning the purchase of a home policy on the purchase of a personal auto policy, and vice versa. The TDI is accepting public comments on this proposal until 5:00 p.m. on March 24, 2025. Comments can be submitted via email to [email protected] or mailed to the Office of the Chief Clerk.
