I lived in Texas from for several years before moving to the east coast for professional opportunity. In 1980, I moved back to Texas in the north Dallas area from Manassas, Virginia. I discovered that my homeowner insurance was almost 300% higher than it was in Virginia. When I inquired, I was told that it was because of hurricanes. When I challenged that a hurricane had never hit Plano north of Dallas, I was told it was because of tornadoes. I countered that Oklahoma and Kansas both had as many or more tornadoes than Texas, but their insurance rates were still much lower than the citizens of Texas were being charged. The last time I heard any statistics, TEXAS had one of the HIGHEST homeowners insurance rates in the nation!!!
I currently live in north Galveston County. It is about as far north as I can get and still be in Galveston County, i.e. about 30 or more miles inland. Yet, I pay insurance on my homeowners that is like those that live closer to the gulf even though it has never flooded.
After thinking back at the homeowners insurance rates in the 1980s, they really don't look that bad as compared to the current rates. Between 2001 and 2003, my homeowners policy went up 67%, and I had NO claims, do not live in a flood zone, and have never been flooded. At this time, my annual premium is over 1% of the total value of my house and lot.
While living in Virginia, I discovered that cars were insured not only where one lived, but also by how many miles they were driven a year. If a car was driven less than 12K miles a year, their rates were much lower than if over 12K miles. This is a sad difference than what I encountered when I purchase a handicapped van for my Mother and drove it only 100 miles per month. I used it on Sundays to take her to church. The van was never off city streets and was seldom driven over 35 miles per hour. I had to paid full insurance as if I were driving it 100k miles a year and that could have included driving to and about in downtown Houston.
While working in Germany, I found another interesting thing about how their insurance works. There, your best rates are if you have been driving 10 years without a major accident. Every year up to the 10-year time that you go without an accident, your rates go down until you reach the best rate at 10 years. Doesn't this sound like something that should be implemented here in Texas(and other states as well)? Why not reward safe drivers and let those that are careless and accident prone pay rates commensurate with their driving habits?
The other rip-off that I see in Texas is the way young drivers are treated. Until a male driver reaches 25, he gets penalized just like the crazy wild 16-year-old drivers. If a young driver performs for like 3 years without an accident or moving violation, it would appear they are a responsible, safe driver. Yet, they pay the same rate regardless of their driving record.
A couple years ago, my automobile was involved in an accident. The other driver was at fault so I was not out any expense-directly-out of my pocket. When I received my car back from the auto repair shop, I was also given an itemized list of all charges and what had been repaired on the car. Very much to my surprise was the towing bill of $341.12. The car had to be towed 6.2 miles. If I figure this out correctly, that amount to about $55 per mile.
When I called my insurance company to complain--which happens to be the same as the one who caused the accident, I was told that the tow trucks could charge whatever that wanted and that they had NO recourse but to pay it. This is one reason why insurance rates are so high. In Texas, it appears that the tow truck drivers have a legal license to steal.
I have no way of knowing if my homeowners policy is about the same as others pay here in Texas, but if so, almost 1% of the homes in the state would have to be destroyed before the insurance companies would be losing money. Since the threat from hurricanes doesn't affect 2 of the largest cities in the US--Dallas/Fort Worth and San Antonio, and most likely wouldn't do much damage to the norther half of Houston proper, It would be hard to think that hurricanes could get anywhere near 1% of the Insured homes. The other big threat is tornadoes. Yes, tornadoes are bad and the news cast always shows the worst damage yet. When a tornado hits the ground, they typically clear a path from maybe 100 to 400 yards wide. They may be on the ground for maybe a half mile or so. If you even think of a larger scenario that would be 800 yards wide(half mile) and it were to stay on the ground for 5 miles, how many house would be in this footprint? If that is multiplied by the number of tornadoes that hit populated areas, then how many homes are we talking about? When that is translated into the percentage of home insured, it is most likely a VERY small percentage.
I have realized that my insurance is no better than my agent. [For you geico customers, don't ask what happens after your second accident.] The problem is that my agent doesn't set the rates; he just collects money and submits claims if I have one. I don't know this for a fact, but I have been told that the insurance agent gets between 8 and 12% of the premium that he receives. So, when rates sky rocket, he may act like he is feeling your pain. Being real, he's probably loving making more for doing the same job. If you want some more pain, just check out what kind of automobile your agent is driving. Mine is driving a new Mercedes.
Who is watching the industry? Who is taking up for the consumer?
WHO? WHO? WHO? I'm afraid in Texas the answer is NO ONE!!! It would seem there is
something wrong with this picture!!!
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