Texas has the third highest home insurance rates in the nation, behind only Florida and Louisiana. The reason is the same in all three states: climate change has increased the number of devastating storms.
Home insurance is insurance that protects your home in case of accidents or disasters. Mortgage companies are required to do so, just as they are required to carry full coverage insurance on the cars they finance. This likely represents a significant portion of the payer’s monthly bill.
The cost of home insurance in Texas has skyrocketed in recent years, according to an in-depth analysis conducted by the Houston Chronicle. Using U.S. Census data, they determined that home insurance rates in Texas increased by 14 percent between 2022 and 2023 alone. In 2014, it rose 77%.
This also excludes storm insurance. Texas separates flood and storm coverage, meaning homeowners must purchase two policies for complete protection. These policies can cost more than $1,000 per year depending on your location.
Some states, such as California, have strict regulations on home insurance policies to protect customers from price gouging. Unfortunately, these regulations mean that many airlines will leave the state rather than sacrifice profits. Texas doesn’t have a lot of regulations, so carriers are often able to charge fees based on coverage.
There is no disputing that the price increase is due to the effects of climate change on the Atlantic storm ecosystem. In 2024 alone, weather events are worth $18 billion, the highest amount in 40 years, according to the National Oceanic and Atmospheric Administration. These include all Atlantic hurricanes and tropical storms, as well as the devastating derecho and multiple tornadoes that hit Houston.
As the Earth’s temperature increases thanks to human activities, the climate becomes unstable. Especially when the ocean gets hotter, more intense and unpredictable storms occur, often intensifying in hours rather than days. Loss of northern glacier mass weakens the polar vortex, allowing cold weather systems to escape further south and collide with warmer climate, creating massive storms. As storms increase and worsen, the number of insurance claims also increases, leading to higher insurance rates.
While some increases are understandable, the Chronicle’s report shows how Texas regulators are failing customers. The Texas Department of Insurance has not forced insurance companies to approve rate increases since 2007, denying 75% of rate applications requesting removal of rate increases. Insurance companies are in a very long bind in Texas.
As a result, many homeowners go without insurance and hope for the best once their home is paid off. Buyers fear they won’t be able to afford the interest rates and exit the market. In the Lone Star State, the costs of climate change are extremely high for the average homeowner.
