Texas Home-Insurance Costs Are Skyrocketing. State Leaders Don’t Have Many Solutions.

Homeowners here pay some of the highest premiums in the country. Addressing the crisis will require some hard choices. 

Around a decade ago, Kat and Giles Roberts bought a three-thousand-square-foot house in Clear Lake, the southeast Texas town on Trinity Bay that is best known as the home of NASA’s Johnson Space Center. Until last year, the couple paid between $3,000 and $4,000 annually for home insurance. They didn’t make any claims until last spring, when they had to replace their roof after a hailstorm. The couple paid their $12,450 deductible out of pocket; their insurance company, Chicago-based Kemper, covered the rest. Later that year, Kemper announced that it was hiking their premium to about $12,000. The Robertses asked their insurance broker to shop around, but they couldn’t find any policy for less than $9,000. 

“All of our neighbors are finding the same thing,” said Kat, a 65-year-old retired teacher. “We know one family that’s very wealthy, so they went with minimal insurance. But we don’t have that kind of money, and we need to know we’re covered.” Although she lives near the Gulf, Kat isn’t in one of the coastal areas eligible for a plan from the Texas Windstorm Insurance Association, the insurer of last resort for property owners who can’t get private plans.

Most Texans don’t pay as much for home insurance as Kat and Giles. But from the Panhandle to the Rio Grande Valley, homeowners have seen their premiums spike in recent years. According to the Texas Department of Insurance, premiums rose 21 percent from 2022 to 2023. Over the past five years, Texas has seen some of the sharpest hikes in the country, according to an S&P Global analysis. Texas homeowners pay an average of $3,973 a year, the sixth-highest amount in the U.S. and nearly twice the national average, according to a report by Bankrate. The increases have mainly been driven by the growing frequency and severity of natural disasters, along with the rising cost of building materials. (Premiums range from $830 in Vermont to $5,640 in Nebraska, with the most expensive states located on the Gulf Coast and in Tornado Alley.)

The skyrocketing cost of home insurance has captured the attention of state lawmakers during the current legislative session. Last April, Lieutenant Governor Dan Patrick made the issue one of his eight “interim legislative charges” for the Senate Committee on Business and Commerce, alongside such issues as electrical grid reliability, Bitcoin mining, and artificial intelligence. The committee held hearings on the home-insurance crisis in October and February, during which state senators grilled regulators and insurance-industry representatives on why insurance is so costly. Several bills intended to bring down insurance premiums have been introduced during the current legislative session, although consumer advocates told me that none are likely to make a significant difference.

Until recently, when Texas politicians talked about making home ownership more affordable, they tended to focus on bringing down property taxes. Earlier this month, the state Senate unanimously voted to expand the homestead exemption from $100,000 to $140,000, which would save the average homeowner around $360 per year—one session after passing another property tax reduction plan. But rising home-insurance premiums are likely to wipe out those savings in a matter of years. “We just voted to give homeowners $22.7 billion in property tax relief,” noted Democratic state Senator Nathan Johnson. “What if that scope of funding was applied towards making structures more catastrophe-resistant? What would the effect be on insurance losses?”

One of the most intriguing bills is HB 1576, introduced by Republican state Representative Tom Oliverson, who represents a suburban district northwest of Houston. The proposed law would award grants to Texans that could be used to fortify homes against hurricanes and hail. It’s modeled after a 2011 Alabama program that provides grants of as much as $10,000 to install Fortified-rated roofs and windows. Homeowners who use the grants to harden their homes are eligible for insurance discounts of as great as 55 percent off the wind portions of their policies. As of last year, Alabama had awarded at least 50,000 grants. 

“It kind of pays for itself over time,” Oliverson told me. “If we lessen the cost of a claim, that translates into a lower cost to insure that home.” But the bill doesn’t earmark any funding for the program. “It just depends on what Texas is willing to commit to it and what mechanism it wants to use,” Oliverson explained. “We left it open-ended so that we could have this conversation over the course of the session.” 

Among the other solutions under consideration during the current legislative session are bills that would provide premium relief to homeowners experiencing economic hardship, require arbitration for disputes over property appraisals, and prohibit an insurer from canceling a policy because of a claim. (A separate bill, filed in the Senate by Republican Mayes Middleton and in the House by Republican Dennis Paul, would merely require an insurer to provide the homeowner with a written reason for the declination or cancellation of a plan.)

Not everyone is convinced the proposed laws will make a difference. “It’s clear that the Legislature isn’t going to tackle the hard issues here,” said John Cobarruvias, a retired NASA computer analyst from Clear Lake who has become one of the state’s most outspoken advocates for home-insurance reform. Last year, Cobarruvias organized two community meetings in Seabrook, on Trinity Bay, to discuss skyrocketing premiums. “They’re going to tell us to go shop around. As if we’re too stupid to understand that we have to do that.”

According to insurance-industry representatives, Texas’s rising premiums are caused by three factors: inflation; the increased frequency and severity of natural disasters, caused by global warming; and the costs of paying for so-called nuclear lawsuits—judgments of $10 million and above—filed by homeowners. “In Texas, we get every kind of weather,” said Scott Kibbe, vice president of state government relations at the American Property Casualty Insurance Association, an industry trade group. Between 2019 and 2023, Texas suffered an average of eleven billion-dollar weather events each year, with sixteen in 2023 alone. The February 2021 winter freeze, when the state’s electric grid failed, resulted in some half a million claims, costing insurance companies around $11 billion. 

Kibbe told me that insurance companies are actually underwater on their Texas policies, paying out $1.07 in claims for every dollar they take in premiums. But that doesn’t mean the companies are losing money. Insurance companies mitigate their risks by purchasing reinsurance and investing their customers’ premium payments in high-yield stocks and bonds. The insurance giant Chubb, for instance, offset its anticipated $1.5 billion payout for the recent California wildfires with $1.69 billion in investment income from the previous quarter. 

At a community meeting in Seabrook last summer that was attended by around 250 homeowners, Cobarruvias ridiculed the insurance companies for pleading poverty. “When they’re in the Capitol, [the insurance companies] are poor-mouthing it—‘Oh God, our claims!’ What they don’t tell lawmakers is how much money they’re making on investments, and what their net profit is at the end of the year.” 

When examining home-insurance premiums, California offers an instructive comparison. Like Texas, the Golden State is notoriously vulnerable to natural disasters. But California homeowners pay an average of $1,429 for insurance—less than half of what Texans pay. The difference lies in how the two states regulate insurance. In California, companies must get preapproval from state regulators before they can raise rates. Texas, on the other hand, has a “file and use” policy, under which insurance companies raise rates first and regulators examine them later. 

In theory, regulators here have the power to challenge rate increases in court. In practice, this almost never happens. Instead, regulators and insurance companies typically resolve disputes behind closed doors. “There’s not a lot of straight-up ‘We don’t like this and therefore you can’t have it,’ ” said David Bolduc, who leads the Texas Office of Public Insurance Counsel, which is charged by the state legislature with representing the interests of consumers. Bolduc told me last year that his office challenges less than half of the approximately 260 proposed increases filed each year. (When contacted recently, he said he did not have a more current figure available.) The state has not denied a rate increase since 2017, according to reporting by the Houston Chronicle. 

During the October hearing on home insurance in Austin, the Senate Committee on Business and Commerce discussed the idea of reverting to the preapproval system Texas had until 2003. Both Republican and Democratic members expressed cautious interest, but no such bill has yet been introduced. Not surprisingly, insurance companies are vehemently opposed to the idea. “California, from our perspective, has been a case study in how not to regulate,” said Jon Ward, vice president of public affairs at the American Property Casualty Insurance Association. “California has kept prices artificially low. And they’re paying for that now.” 

Ward was referring to the growing number of insurance companies that are no longer writing new policies in California or have pulled out of the state altogether. Hundreds of thousands of California homeowners have been forced onto the state’s FAIR Plan, an insurer of last resort funded by assessments on private insurance companies. But the same thing is happening on a smaller scale in Texas, as insurance companies jack up rates or refuse to issue policies. My wife and I found ourselves forced to join the Texas FAIR Plan—our version of California’s program, also funded by assessments on private companies—last summer after receiving numerous rejections from private insurers. 

More than 100,000 Texas homeowners were covered by the Texas FAIR Plan as of last September, up from 73,000 a year earlier. The Texas FAIR Plan Association expects that number to rise to 135,000 by the end of 2025. To join the FAIR Plan, homeowners must have been rejected by at least two insurance companies. In an indication of how desperate Texas homeowners have become, some customers appear to be bending the rules by applying for plans they know they’ll be rejected from. “A lot of people will tell you that it’s not hard to get enough declinations to get onto the plan,” said Bolduc, the state public insurance counsel. “If you’ve got a smart agent, you can get in there and pay lower rates.” 

Kat Roberts, the Clear Lake homeowner, has considered doing just that. “A lot of our neighbors are using the FAIR Plan, but we would have to not be honest to get that,” she told me. “We’re not being declined; we’re just getting astronomical quotes. But because we chose to be honest, we’re paying twelve thousand a year. We can’t afford it. It’s just out of control.”