Texas Windstorm Insurance: Public Or Private?

Texas Windstorm Insurance is a type of specialty insurance that covers damage caused by wind or hail. It is not required by the state, but it may be required to qualify for a mortgage in high-risk counties. This type of insurance can be purchased from private companies or the Texas Windstorm Insurance Association (TWIA), which acts as an insurer of last resort for those who cannot obtain coverage elsewhere. TWIA policies are sold through private providers, and eligibility requirements include living in a high-risk county and having been rejected for coverage by at least one private insurer. The average cost of a TWIA policy is around $2,000 per year, but rates vary depending on factors such as the home's construction type, deductible, and coverage amount.

TWIA windstorm insurance rates

The Texas Windstorm Insurance Association (TWIA) is a public insurer of last resort, offering windstorm and hail insurance to home and commercial property owners who cannot obtain this coverage on the regular market due to the risk of catastrophic hurricanes. TWIA windstorm insurance rates are determined by the TWIA Board of Directors and are subject to review by the Texas Department of Insurance (TDI). The rates are set to ensure that TWIA can meet its financial obligations.

TWIA wind insurance policies have deductibles, which are calculated as percentages of the total dwelling limit rather than flat dollar amounts. Deductibles typically range from 1% to 5% of the dwelling limit. A higher deductible generally results in a lower premium.

TWIA rates are subject to change and must be reviewed and approved by the Commissioner of Insurance. As of 2024, an actuarial analysis indicates that TWIA rates should increase by 38% for residential policies and 45% for commercial policies to be actuarially adequate. TWIA has proposed a series of smaller rate changes over the years to achieve rate adequacy.

Who qualifies for TWIA insurance?

Texas Windstorm Insurance Association (TWIA) insurance is available to residents of high-risk counties for wind and hurricane damage. These are counties along the Gulf Coast that have a history of hurricane damage. To qualify for a TWIA insurance policy, several criteria must be met.

Firstly, applicants must have been rejected by at least one company that sells windstorm insurance in their area. If an applicant was only offered coverage that didn't meet their needs and was more limited than a TWIA policy, this counts as a rejection.

Secondly, if an applicant's home was built, altered, remodelled, or enlarged after September 1, 2009, and is located in flood zone V, they need a flood insurance policy in place, too. Proof of flood insurance coverage must be provided before purchasing a TWIA policy.

Thirdly, the house must be certified as compliant by the Texas Department of Insurance (TDI) or TWIA for windstorm building codes. Once a house is inspected, which should happen during construction, a certificate of compliance, either a WPI-8 or WPI-8-C, is issued. Any alterations or repairs made to the house also need to comply with TWIA requirements.

Finally, the home should be well-maintained and not have unrepaired damage or hazardous issues.

How to get Texas windstorm insurance

Texas Windstorm Insurance is an option for those who cannot get coverage in the regular market due to the risk of catastrophic hurricanes. It is not a legal requirement to have windstorm insurance in Texas, but some lenders may require it for those in high-risk counties.

If you live anywhere in Texas except along the coast, you probably have wind and hail coverage in your homeowners' policy. If you live along the coast, you will need to buy a separate windstorm policy. Many people get this coverage from the Texas Windstorm Insurance Association (TWIA).

You buy a TWIA policy through an insurance agent. If your agent doesn't sell it, you can use TWIA's website to find an agent who does. To get a TWIA policy, you must:

• Live or own a business in TWIA's service area.
• Have asked an insurance company for wind and hail coverage and been turned down.
• Get an inspection and certificate showing that your home or business was built or renovated according to certain construction codes.
• Carry a National Flood Insurance Program (NFIP) flood policy (if in a high-risk flood zone).
• Show proof of insurance denial.
• Ensure your home is in an "insurable" condition.

TWIA insurance is sold through private providers, and all licensed home insurance companies in Texas are required to be members of the TWIA.

Is windstorm insurance mandatory in Texas?

In Texas, windstorm insurance is not mandated by law. However, if you live in a high-risk county and have a mortgage, your lender will likely require you to have windstorm coverage. This is especially true for homes located in Tier 1 counties, where windstorm risks are the highest. If your home is in a Tier 2 county, your lender may still require windstorm insurance, although the risk is slightly lower.

Windstorm insurance is designed to repair or rebuild your house if it is damaged by hail or wind from a tornado, thunderstorm, or hurricane. While it is not legally required in Texas, it is an important consideration for homeowners in high-risk areas.

If you live anywhere in Texas except along the coast, your homeowners insurance policy likely includes wind and hail coverage. However, if you live along the coast, you will need to purchase a separate windstorm policy, as your homeowners insurance probably doesn't cover wind and hail damage.

You can purchase windstorm insurance from private companies or the Texas Windstorm Insurance Association (TWIA). TWIA provides windstorm and hail coverage to property owners who cannot obtain this coverage in the regular market due to the risk of catastrophic hurricanes. To be eligible for a TWIA policy, applicants and properties must meet specific criteria, including location in a designated area, denial of coverage by at least one authorized insurer, and certification by the Texas Department of Insurance or TWIA for compliance with building codes.

While windstorm insurance is not mandatory in Texas, it is essential to consider the risks associated with high-wind events in certain areas. Lenders may require windstorm coverage as a condition of a mortgage, and homeowners should carefully review their policies to ensure they have adequate protection.

What does TWIA insurance cover?

Texas Windstorm Insurance Association (TWIA) insurance covers the costs related to damage from wind, hail, and some hurricanes. This includes repairing or replacing the physical structure of a home, detached structures such as a garage, and belongings like clothes and furniture. TWIA insurance also covers the costs of clearing debris, such as fallen tree branches, and temporary or emergency repairs to prevent further damage.

An optional coverage in TWIA insurance is the additional living expenses coverage, which helps cover food, lodging, and other costs if the policyholder is displaced from their home due to wind or hail damage. This coverage does not extend to instances where the policyholder has been evacuated, their utilities have been disconnected, or there are road closures or other infrastructure issues common to hurricanes and windstorms.

TWIA insurance also includes increased cost of construction (ICC) coverage, which helps with the additional costs of complying with current building requirements and laws in the policyholder's area if their home is damaged.

It is important to note that TWIA insurance does not cover all types of hurricane damage. For example, storm surges and flood damage are not covered and would require a separate flood insurance policy. Additionally, certain types of property, such as vehicles, engine-powered lawnmowers, and satellite dishes, are specifically excluded from TWIA policies.

TWIA insurance is often required by lenders for homes located in high-risk counties with a history of hurricane damage. While it is not mandatory by law, homeowners in these areas may struggle to secure or maintain a mortgage without proof of windstorm insurance.

Frequently asked questions