Houston Homeowners Face Rising Home Insurance Costs
CLEAR LAKE, Texas (KTRK) — Homeowners in the Houston area are increasingly feeling the pinch of rising home insurance rates, with many considering dropping coverage altogether. 13 Investigates has found that these escalating costs are becoming unsustainable for many residents, and consumer advocates express concern about the state’s handling of the situation.
John Cobarruvias, a Clear Lake homeowner since 1989, exemplifies the problem. He recalls paying $750 annually for home insurance with a $500 deductible back in 2000. Today, he faces a $6,000 annual premium with a $9,000 deductible, a trend he describes as unsustainable.
“It was just a perfect place for us and our kids and over the years, we just didn’t want to move,” he said. “It’s a great place to live, but we’re getting to a point where we’re going to have to make some decisions. This increase in insurance can’t continue. It’s unsustainable.”
This increase in insurance can’t continue. It’s unsustainable. John Cobarruvias, Clear Lake homeowner
Cobarruvias has experienced consecutive annual rate increases of 25%. According to a 13 Investigates analysis of data from the Texas Department of Insurance (TDI), the frequency of insurance companies raising rates has more than doubled in the last decade.
Ware Wendell, executive director of Texas Watch, a consumer advocacy group, points to shortcomings in the current system. He explains that the “file and use” system allows insurance companies to implement new rates immediately, without prior approval from the TDI. Wendell argues that this system needs reform to protect consumers from excessive charges. Another solution he suggests is the implementation of a “prior approval” system.
“The insurance companies don’t have to wait for approval from the Department of Insurance before they start charging rates under our current laws because we’ve got this file and use system which allows them to file their rates and start using them immediately,” Wendell said. “It’s up to the Department of Insurance if they identify an overcharge, to then challenge that… We’re not seeing that the TDI is doing that very often.”
Severe weather events are also contributing to the insurance crisis. The National Centers for Environmental Information reports that Texas experienced 20 severe weather events last year alone, leading to over $20 billion in damages from droughts, storms, and tropical cyclones.
“The cost of materials and labor is going up and up. Inflation is not coming back under control the way that we hoped that it would, so that’s a factor as well in terms of how much we’re paying for insurance. It has this knock-on effect,” Wendell said. “If lumber costs more, then the insurance that you buy to protect your home is going to cost more.”
While we want insurance companies to make a reasonable profit in the state, we don’t want them to make an excessive profit with a product that we are forced to buy. Ware Wendell, executive director of Texas Watch
Wendell emphasizes that while insurance companies are entitled to a reasonable profit, excessive earnings on a mandatory product are unacceptable. Insurance rates are determined by a complex calculation that takes company losses, labor and material costs, and other data into consideration.
Residents are required to carry home insurance if they have a mortgage, but face the choice of dropping coverage once the home is paid off. Robert Dempsey, a Clear Lake resident, recounts the difficulty he experienced when his insurance carrier left Texas, forcing him to search for new coverage amidst high prices. Dempsey says he is now considering going without insurance.
“The summer of 2024, we began shopping around to see who we could get for our new insurance carrier and found it to be a lot harder than we were expecting,” Dempsey said. “A lot of the companies that we contacted just said they were not writing policies in this area, and then those that were, the prices tend to be really, really high, or they said, ‘you know what, you might have to go to the Texas Fair Plan.'”
Those who are unable to get coverage at a reasonable price may often seek insurance through the Texas FAIR Plan Association, established to provide property insurance to Texans denied coverage elsewhere. At the end of 2024, the Texas FAIR Plan had 61,774 policies in place, with considerable numbers in Fort Bend and Galveston counties. Cobarruvias, who has a minimal history of claims, is now contemplating dropping his coverage altogether.
“I’m supposed to be renewed in March, and I have a funny feeling it’s going to be a real big increase,” Cobarruvias said. “If that happens, we may just forego insurance completely, and I’m not the only one doing that either.”
Cobarruvias said he’s had just two homeowners’ insurance claims over the last 30 years, one when Hurricane Ike caused damage to their roof and more recently when a hailstorm caused roof damage.
“We would take that money that we’re paying (in insurance) and put it into an account somewhere, and hopefully, after maybe five or six years, we’ll be able to cover the cost of repairs,” Cobarruvias said. “We haven’t had a lot of need for the insurance and you get to a point where you have to make a decision on it.”
Despite being able to make the choice to forgo insurance, Cobarruvias recognizes that others do not share his flexibility and are struggling due to rising expenses.
“They’re stuck,” he said. “It is a problem affecting every single one of us.”
