Jane Dotson
Texas homeowners have been experiencing double-digit insurance rate hikes, with some insurance companies asking for increases of up to 73%. The average cost of home insurance in Texas is $2,470 annually or $206 per month, making it 63% more expensive than the national average. The cost of home insurance in Texas varies depending on location, with El Lago being one of the most expensive places to insure a home, and El Paso being the cheapest. Texas is also the top state for hail-related damage, with 1,123 hail events recorded in 2023. State Farm is the top home insurance company in Texas, offering the cheapest rates at an average of $3,725 a year.
| Characteristics | Values |
|---|---|
| Average monthly cost | $321 |
| Average annual cost | $2,470 to $3,872 |
| Cheapest insurance provider | Texas Farm Bureau |
| Cheapest insurance provider (based on reputation) | State Farm |
| Average premium | $1,982 |
| Most expensive place for insurance | El Lago (ZIP code 77586) |
| Cheapest place for insurance | El Paso (ZIP code 79905) |
| Average cost in the most expensive place | $14,025 |
| Average cost in the cheapest place | $2,000 |
| Difference in average cost between the most and least expensive places | $12,000 |
| Number of double-digit rate increase requests in 2023 | 150+ |
| Number of double-digit rate increase requests in 2024 | 74 |
| Percentage increase in the number of double-digit rate increase requests since 2014 | 560% |
| Maximum increase in percentage requested by any company since 2024 | 73% |
| Coverage | Damage to the home from a covered event, such as a fire, windstorm, lightning, or hail |
| Exclusion | Flooding |
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What You'll Learn
Texas insurance rates and affordability
Texas is subject to major weather threats all year round, from hail, thunderstorms, and tornadoes in the spring to high-wind damage in the fall. As a result, homeowners' insurance premiums have been increasing dramatically. Melinda Clifton, for instance, saw her annual homeowner's policy cost rise from $2,600 to $8,800 in just one year.
The Texas Department of Insurance (TDI) data analyzed by NBC 5 Investigates revealed that insurance companies asked the state to approve double-digit rate increases more than 150 times in 2023, and 74 more times in the following year, with one company requesting a 73% increase. The number of double-digit rate increases requested in Texas increased by 560% since 2014. These increases are due to the large losses insurance companies have incurred.
The rising cost of insurance is complicating housing affordability in Texas. The Texas Windstorm Insurance Association (TWIA), which provides wind insurance to residents in coastal counties, has sought a 10% premium increase. At the same time, flood insurance rates are also rising, with average premiums expected to increase by up to 75% in Harris County. As a result, some Texans are turning to self-insuring, saving money for future property damage instead of purchasing commercial insurance.
However, Texans do have options to find affordable insurance. The state has over 180 insurance companies, and the Texas Department of Insurance's website allows residents to compare rates and coverages from multiple companies. Texans can also look for discounts, such as those offered by Progressive for quoting in advance, bundling policies, or installing a home security system.
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Hail damage and weather threats
Texas is subject to significant weather threats all year round, from thunderstorms, tornadoes, and hail in the spring to high-wind damage in the fall. The state is particularly vulnerable to hailstorms, which can cause extensive property damage and lead to costly insurance claims.
Texas is known as the "hailstorm capital of the United States," experiencing more hailstorms than any other state. In 2023, there were 1,123 hail events recorded in Texas, the highest in the country. These hailstorms can bring record-breaking hailstones, with some reaching softball or even melon size. The frequency and severity of hailstorms in Texas are due to its unique weather patterns, where warm, humid Gulf air collides with cold fronts, creating the perfect conditions for large and frequent hail.
The impact of hailstorms on Texas communities has been significant. Between 2016 and 2018, Texas had the highest hailstorm losses among all states, with property damage reaching $6.5 billion. In 2023, hailstorms affected over 2 million Texas homes, causing unprecedented insured losses. Cities like Dallas, Austin, and San Antonio have been particularly hard hit, with widespread roof and vehicle damage. The financial toll of these storms has led to increased insurance rates for homeowners, with some facing dramatic increases in their annual premiums.
To mitigate the risks associated with hail damage, Texans may want to consider purchasing additional coverage for their homes. While standard homeowners' insurance policies may provide some protection, they often exclude coverage for specific perils like flooding or standalone events. By adding extra coverage to their policy or purchasing a separate standalone policy, Texans can ensure they have adequate protection against the financial burden imposed by hailstorms and other weather-related disasters.
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Average insurance costs in Texas
Homeowners insurance in Texas is not mandatory, but it is a good idea to have it as the state is subject to major weather threats all year round. These include hail, thunderstorms, tornadoes, and high winds. Texas ranks as the top state for hail-related damage, with 1,123 hail events recorded in 2023. Flooding is also a concern, and while it is not typically covered under a homeowners policy, Texans can purchase a private flood insurance policy or NFIP.
The cost of homeowners insurance in Texas varies, with the average cost being $2,470 or $206 per month, making it 63% more expensive than the national average. The best and cheapest home insurance company in Texas is State Farm, with an average annual rate of $3,725. Texas Farm Bureau also offers competitive rates, with policies starting at $1,794 per year. The cost of insurance depends on various factors, such as the value and age of the home, the amount of personal property covered, the chosen deductible, and risks specific to the area. For example, the average annual cost of insurance for a home in El Lago with a $1,000 deductible and $300,000 in liability protection is $14,025, while the same coverage in El Paso would cost around $2,000.
Insurance rates in Texas have been increasing, with companies requesting double-digit rate increases more frequently. This is due to the large losses incurred by insurance companies as a result of destructive weather events and natural disasters. Homeowners can shop around for the lowest rates and take advantage of discounts offered by insurance providers to help mitigate the cost of insurance.
It is important to note that homeowners insurance is typically required by mortgage lenders as a condition of the loan. Even if a home is paid off, insurance is still recommended to protect what is likely a homeowner's most valuable asset.
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Cheapest insurance companies in Texas
The cost of home insurance in Texas varies depending on several factors, including the rebuild value of the home, the age and construction, the location and associated risks, and the homeowner's credit score. Texas residents pay 65% more than the national average for home insurance, with an average annual premium of $4,664.65 based on $300,000 in dwelling and $100,000 in liability coverage. However, some companies offer more affordable rates.
Mercury is consistently ranked as one of the cheapest options for home insurance in Texas, with rates that are 58-67% cheaper than the state average. A policy with $350,000 of dwelling coverage costs around $1,254 per year, while $500,000 of coverage costs $1,865 per year, and $1 million of coverage costs $3,816 per year. Mercury also receives reliable customer service ratings, with 66% fewer complaints than the average insurance company of its size.
Texas Farm Bureau also offers highly competitive rates, especially for those looking to bundle their home and auto insurance. A policy from the Texas Farm Bureau costs $2,506 per year, which is $1,188 cheaper than the Texas average. Customers who bundle their home and auto insurance can save up to 15%. The company also receives excellent customer service reviews, with 87% fewer complaints than the average company of its size.
Chubb is another affordable option, particularly for those with high-value homes. A policy with $500,000 of dwelling coverage costs $3,721 per year, while $1 million of coverage costs $5,778 per year. Chubb policies include extended replacement cost coverage and higher flood insurance limits than the National Flood Insurance Program. However, Chubb has mixed customer service reviews.
Other companies that offer some of the most affordable homeowners insurance in Texas include Allstate, Foremost, Amica, Farmers, USAA, and Nationwide. It is important to shop around and get quotes from multiple companies to find the best rate for your specific needs.
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Insurance requirements for Texas homeowners
Homeowners insurance is not a legal requirement in Texas. However, if you are financing your home through a mortgage lender, they will likely require you to have insurance as part of your loan terms. Even if your home is paid off, it is still a good idea to have insurance to protect your assets.
When shopping for homeowners insurance in Texas, it is important to be aware of the state's unique risks. Texas is subject to major weather threats all year round, including hail, thunderstorms, tornadoes, and high winds. As a result, it is important to carefully consider the coverage offered by different insurance policies.
Dwelling coverage, or Coverage A, protects the structure of your home, including the roof and walls, as well as any attached structures such as a porch. Other structures coverage, or Coverage B, protects detached structures such as fences, sheds, and detached garages. Most home insurance policies also cover personal property, providing a percentage of your dwelling coverage limit to repair or replace furniture, clothing, and other belongings.
It is important to note that most home insurance policies do not cover damage caused by floods. If your home is in a designated flood zone, your lender will require you to have flood insurance. However, floods can occur outside of these zones, so it may be worth considering additional flood coverage, such as a private flood insurance policy or NFIP, if available.
When choosing a homeowners insurance policy in Texas, it is essential to shop around and compare rates and coverages from multiple companies. Premiums can vary based on factors such as the location of your home, your claims history, and your credit score. By comparing different options, you can find the policy that best meets your needs and budget.
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Frequently asked questions
The average cost of homeowners insurance in Texas varies depending on the source. One source states that the average cost is $2,470 annually or $206 per month, while another source states that the average cost is $321 per month for $300,000 in dwelling coverage with a $1,000 deductible and $300,000 in liability protection.
The cost of homeowners insurance in Texas can vary depending on several factors, including the value and age of the home, the amount of personal property to be covered, the chosen deductible, and regional risks such as hurricanes, wildfires, and hail.
Yes, some insurance companies offer discounts for quoting in advance, bundling home and auto policies, and installing a home security system. Shopping around for the lowest rate when it's time to renew a policy can also help in finding a more affordable option.
Homeowners insurance is not required by law in Texas. However, if you're financing your home through a mortgage lender, they will likely require you to obtain a certain level of insurance coverage as part of your loan terms. Even if your home is paid off, it is still recommended to consider homeowners insurance to protect your assets.
