Texas is no stranger to natural disasters, and unfortunately, homes often receive the brunt of the damage from heavy rain, hail, and high winds.
Recent severe weather events have undoubtedly led to a rise in homeowner’s insurance claims for roof damage as well as an overall spike in rates. Despite the increase, various reports within the last year reveal that some insurance businesses are no longer offering coverage in certain states across the U.S., leaving homeowners concerned about protection for their home.
Robert Oncken, principal and owner of Cypress-based Oncken Insurance Agency, explains the recent impact on insurance companies and how it might affect your home’s coverage.
“Despite all the rate hikes in recent years, many of the insurance companies have been struggling to post a profit,” Oncken said. “That is why we are seeing fewer insurance companies in the market. For the ones who are still here, all of them are being more selective on what houses they will insure. This is an issue that increases every time we lose an insurance company.”
As Texas and its communities grow, it will inevitably lead to more people wanting to buy and own homes, Oncken explains. When a state loses an insurance company, those customers will need to move to a remaining insurance company.
“So, the remaining insurance companies have to absorb a larger portion of the market, and they may not be able to do that profitably,” he said. “That means the remaining companies are going to be more selective about what they allow on their books.”
Due to the homeowner’s insurance market becoming “tighter” in general, Oncken said insurance companies might request additional information and/or requirements from clients, such as:
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Pre-binding roofing inspection/report – the insurance company may ask for a roofer report that attests to how much “life” is left in your roof.
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Higher deductibles on wind and hail coverage – the insurance company may increase your wind/hail deductible to 2% or 3%, or maybe even more.
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ACV/scheduled roof coverage – the insurance company may apply depreciation as well as a deductible for roof coverage (this means you’ll be paid less for any roofing claim).
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Tighter underwriting based on roof age – the insurance company may refuse to bind/start coverage on roofs over a certain age even if there is “life” left in the roof – this makes it more difficult to change insurance companies each year the roof ages.
“Things are changing. It’s almost certain that your homeowner policy’s roofing coverage has changed recently or is changing in the next year or so,” Oncken said. “Maintenance on your roof has always been important. Having a good relationship with a professional roofing company is as important as your plumber or dentist or accountant.”
Oncken recommends that homeowners pay close attention to their homeowner’s insurance policy and what it does and does not cover, especially at renewal:
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Has your wind/hail deductible changed?
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Is your roof replacement cost coverage (RCV), actual cash value (ACV), or scheduled roofing coverage?
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Is your current insurance company still writing new business in your community?
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Have you met with your insurance agent to review any changes to your coverage?
However, Oncken said changes in coverage are not necessarily a bad thing, and that they often mean an increased availability and lower premiums.
Finding solutions that work for both the customer and the insurance company is critical to the economy, he adds.
“Things have been changing and are certainly more expensive than it was a few years ago, but it’s not as bleak as it could be,” he said. “The fact that insurance companies are still engaged in finding a solution in our state/community is a good thing. There are states where it is more and more difficult to find insurance companies willing to do any business in the state.”
Oncken said he believes customers should start seeing some increased engagement in the market from insurance companies.
“I’ve already seen some increased signs of interest from several insurance companies – a good sign,” he said. “I’m hoping that a year from now I’ll be able to tell you that we have more insurance companies ‘active’ and writing in our community and not less. All of this could change direction depending on the weather this year.”