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August 23, 2012

Texas home insurance premiums cannot be compared?  Comparing Texas home insurance premiums with premiums of other states sounds like a useful exercise for a home insurance consumer. Of course, unless the consumer is planning to move to another state, what’s the point? The Texas Department of Insurance argues that too many differences exist across borders to give such comparisons any real value anyway.

The department refers to the annual National Association of Insurance Commissioners comparison of premiums. “It is important to note that the comparisons can be quite misleading for several reasons,” reads a message on the department’s website. That might sound like a copout, but the message goes on to explain the state-to-state distinctions that render the comparisons less than apple-to-apple. To wit:

  • Weather hazards vary in type and intensity from region to region. Texas is windy and too many wind-related insurance claims are a killer for a Texas home insurance provider.
  • Economic conditions vary greatly, which means market pressures push premiums up or down according to per capita income and other variables.
  • Urbanization development can be enormously different, with whole sets of insurance issues swinging on an area being rural, suburban or inner city.
  • The cost of rebuilding after a natural catastrophe varies widely from area to area, which home insurance providers must factor into their premiums.
  • Different forms and different reporting criteria undercut statewide comparisons.

All of that undoubtedly is true and relevant. Still, when valid property comparisons can be made, knowing how much more or less an insurance provider charges in a given area is valuable information for a home insurance consumer. It might not be actionable information, but conscientious home insurance policyholders should be interested in it.

Texas is a windy and stormy part of the world, there is no question. Hail storms and tornadoes in several areas of the state can rain down misfortune on property owners. In the Gulf coast region of the state, hurricanes regularly come ashore to wash away a good year. The Lone Star State is not alone in its wind-blown misery, but it can be a Texas-sized headache.

Storms notwithstanding, Texas is a genuine economic leader: It leads the other 49 states in cattle and sheep growing and oil and cotton production. It produces such diverse commodities as asphalt, cement, sulfur, and salt. Millions of tourists visit Texas to see the historic Alamo, then soak up the sun at a Gulf resort. Texas has room enough to accommodate them all.