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Texas Windstorm Rate Hike This February 1338 Views :: 2 Comments :: :: Public Policy, Local News Texas Windstorm Rate Hike This February Homeowner wind rates go up 8.2 percent Rates in the state-sponsored wind-insurance pool are going up 8.2 percent for residences and 5.4 percent for businesses - an increase some say is far more than necessary and will ensure insurance companies keep their profits if a major catastrophe strikes. Insurance Commissioner Mike Geeslin has approved an 8.2 percent rate hike on residential policies for the more than 200,000 coastal residents insured by The Texas Windstorm Insurance Association (TWIA). The rate increase, effective Feb. 1, will add $84 to the $1,023 average annual premium for homeowners in 14 coastal counties and a portion of Harris County, according to the Texas Department of Insurance. A 5.4 percent increase for commercial policies will also take effect Feb. 1. Geeslin also ordered 25 percent of premiums be placed in a catastrophe fund, the highest amount ever set aside to prepare for a major hurricane. The fund now contains about $385 million. TWIA said it needs increased premiums to meet rapid growth related to a Gulf Coast building boom http://recenter.tamu.edu/tgrande/vol14-4/1832.html and fewer private insurers writing policies in hurricane-prone areas. The insurer now covers 213,558 structures, including many school districts and higher education facilities. This year, it has added more than 69,000 structures. In the entire coverage area, potential liability - including business interruption and additional living expenses - totals $62.8 billion. Last year, TWIA, which has $1.8 billion available to pay claims, paid $160 million for losses caused by 2005's Hurricane Rita. Our Take: It’s becoming more important to "fortify" your coastal home or buy a new home that is built that way - and certified (hurricane resistant) by the I.B.H.S. In the future this could make all the difference in rates or even the ability to get coverage. And if you ever gamble by not having coverage, as discussed in the Wall Street article below, you would even more so want your home built high off the ground and very strong. Watch a video about a local developer who builds I.B.H.S. certified homes right here on the Bolivar Peninsula. Download the latest I.B.H.S. Builder's Guide Some homeowners are even preferring to "gamble" as discussed in an article from the Wall Street Journal: Wall Street Journal - More Home Owners Bet Against Mother Nature A growing number of home owners in hurricane-prone areas are foregoing wind coverage because of its costly premiums. "They're betting against Mother Nature," says Robert Rusbuldt, chief executive of the Independent Insurance Agents & Brokers of America, an Alexandria, Va.-based organization that represents 300,000 agents and brokers nationwide. Many of these home owners are doing the math and concluding it can be more cost-effective to cover rebuilding costs out-of-pocket, rather than paying big annual premiums. Others are joining self-insurance pools, another way to avoid costly premiums. These options are generally limited to people who don’t have mortgages — banks require broad insurance otherwise. George Mastics, who lives near the Atlantic Ocean in Palm Beach, Fla., says the structural stability of his house, built in 1935, factors into his decision not to carry wind insurance. "The walls are so thick," he says. "I can't imagine a hurricane tearing it down. ... Maybe I'm a gambler. I don't know." Mastics hasn't paid for wind coverage for a few years. "So far, I'm ahead of the game," he says. Source: The Wall Street Journal, Liam Pleven (09/04/07) Not everyone is complaining, read this article (Nationwide is not on your side) on how smaller and local insurance agencies are reaping benefits from some of the national insurance companies dropping coastal coverage.