‘The sheer volume of claims is extraordinary’ – Texans pay a lot for insurance, but will that help them now?

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As Texans begin the slow recovery from a debilitating winter storm, they may need every penny they can get from their insurance policies. They have certainly been paying for coverage because Lone Star residents, on average, pay some of the highest insurance premiums for homeowners and renters. in the country, the statistics show.

Homeowners insurance premiums in the state cost about $ 1,955 a year compared to the national average of $ 1,249, according to the Insurance Information Institute. That’s the third-most expensive premium in the country, according to the industry-funded consumer education association analysis of 2018 figures, the most recently available. Renters insurance premiums cost $ 225 per year on average versus the average of $ 179, making it the fourth most expensive renters insurance premium. As of Monday, there were fewer than 16,405 Texans still without power, up from 200,000 on Friday and 4 million earlier in the week, according to outage tracking site Poweroutage.us. Meanwhile, millions of people were under a boil water warning, NBC News said. The Insurance Council of Texas, a nonprofit state trade association serving property and casualty insurance companies and their clients, warned residents of the cold temperatures on February 11, sending advice to the media. . “Frozen pipes are an annual problem for many Texans and taking steps to protect your home when temperatures drop below the freezing mark is critical to preventing pipes from bursting and leaking that can cause thousands of dollars in repairs.” Camille Garcia, the organization’s communications and public affairs director, said in a statement. The good news The good news: Many homeowner and renter insurance policies should cover the ravages of winter weather, according to insurance experts. Water damage from a burst pipe would likely be on a homeowner’s policy, while renters insurance would reimburse the policy holder up to a coverage limit if that same burst pipe, for example, ruined furniture, clothing, and furniture. tenant’s computer. Of course, you must have the insurance policy first. About 95% of homeowners nationwide have homeowners insurance policies, said Loretta Worters, spokeswoman for the Insurance Information Institute. That’s because mortgage lenders will require the coverage, he said. Renters insurance is a different story. Only 41% of renters nationwide had renters insurance in 2018, according to Worters. “Cost is a factor,” said Robert Hunter, director of insurance for the Consumer Federation of America. Someone who rents could be in financial difficulties, especially during the pandemic, he noted. “But I also think people don’t think they need it.” When the storm hit the state earlier this month, the Texas Insurance Council said that homeowners policies provide different levels of coverage for water damage and advised residents to talk about coverage, know your deductible and make sure you have adequate coverage. high or tall? Premiums vary between states, depending on factors such as the home inventory and weather hazards within a particular state, Worters said. The recent winter storm, which put the Texas power grid within “seconds and minutes” of total failure, predicts more extreme weather with climate change, some energy analysts said. Acceptance rates for homeowners and renters insurance in Texas reflect national averages, according to Camille Garcia, director of communications and public affairs for the Texas Insurance Council, a trade association.

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“Compounding this natural disaster is a man-made disaster.” ”- Robert Hunter, Director of Insurance, Consumer Federation of America

Premium prices are largely influenced by local weather, he said. “Every year, we face hurricanes, tornadoes, hail storms, wildfires, dust storms. It is just one of these states where we have natural disasters that we continually face. For this reason, our product is priced according to risk ”, he said. While other Texas weather may hit part of the state, such as Hurricane Harvey’s catastrophic hit off the Gulf Coast in 2017, this storm hit the entire state, he said. “The sheer number of claims is extraordinary” and there could be “hundreds of thousands” of claims. Those claims include fenders and houses and businesses that are completely damaged by broken pipes, he said. Hurricane Harvey resulted in a total insured loss of $ 30 billion, which would now be nearly $ 31.6 billion adjusted for inflation, according to the Insurance Information Institute. “Document everything,” Garcia urged. That means taking photos and video of the damages, including documenting when conversations with adjusters, insurers, and others occurred in the claims process. Weather is definitely a factor in premium prices, Hunter said, “that and the lack of good regulators.”

“‘Document everything.’ ”- Camille García, director of communications and public affairs for the Texas Insurance Council

Hunter, who served as Texas insurance commissioner from 1993 to 1995, said the “state’s regulatory situation has become laissez faire. We challenge the fees. We hold hearings on fees. That’s the kind of thing we did as regulators. I don’t see much of that in Texas. “” Texans have been asked to pay more and more for insurance coverage on policies that cover less and less, “said Ware Wendell, executive director of Texas Watch, a non-profit organization. for-profit advocacy for policyholders. The Austin, Texas, resident spent the first half of his Friday shoveling snow at two kiddy pools just to have a water feature after three days without tap water. “This is where We are. It’s really disturbing, “Wendell said. The insurance industry came together to get a House Bill 1774 of 2017 through the state legislature, making it difficult for policyholders to sue their insurance company after a underpayment or denial, Wendell said.

“The Texas insurance industry in 2017 came together to get House Bill 1774 through the state legislature. ”

The bill is pejoratively known as the Blue Canvas Act, named because critics said residents will have to make do with blue tarps on their homes to cover the damage. When an insured sues an insurance company after a storm, the initial money claim of the lawsuit must be within 20% of the final jury award. If that doesn’t happen, the plaintiffs’ legal fees are paid out of the settlement rather than a separate award for legal fees, Wendell said. “You and your attorney should have a crystal ball at the beginning of the process. You have to hire your own experts and project what the jury will do, ”he said. That could completely deter insurance lawsuits, he added. The law also reduced penalties when insurers lengthened the claims process, Wendell said. At the time, the Texas Insurance Council vigorously defended House Bill 1774, saying it “protects the right of consumers to sue for weather-related claims while making changes to prevent abusive litigation practices. “The bill helps stop abusive practices and lawsuits that threatened both the affordability and availability of homeowners insurance in Texas,” he added. “The genesis of HB 1774 began in 2012, after a major hail storm in Hidalgo County, when some trial attorneys and others began to take advantage of existing law to file unnecessary and abusive lawsuits by making excessive claims lawsuits and filing demands. This abusive litigation model later spread to other parts of Texas after the hail storms, ”he said. “Lawyers and others petitioned for cases through advertising, going door-to-door, setting up outside of grocery stores and at flea markets, and in some examples they filed lawsuits even when the owner was unaware that a complaint had been filed. in his name ”, he added. Is a ‘rude awakening’ coming? And now? Texans face high prices in the wake of the storm, such as bottled water that sells for triple the price and hotel rooms for $ 1,000 a night. The incredibly high prices have the judges and the Texas Attorney General warning against excessive price increases. Even more financial pain could arise between lack of coverage and underpayments, consumer advocates say. As the pandemic swept through the economy last year, many people who had renters insurance may end coverage to save costs, Hunter said. They may not have anticipated a devastating winter storm in the spring of 2020. This is “the last thing” anyone would need if they were already in trouble, Hunter added. “I would say more than half of the injured people are going to have to eat it,” Hunter said. Wendell worries about people who have coverage but could still end up with a denial, a partial payment, and then an uphill battle in court. “Compounding this natural disaster is a man-made disaster,” he said, pointing to the 2017 law related to insurance claims. “Texas policyholders will be in for a rude awakening in the weeks and months to come.”