Many know by now that the Homeowner Insurance market in Harris County is in trouble. Either you have a policy that has doubled or even tripled in price or you have lost valuable coverage since Hurricane Ike. This has affected most Captive agents (Allstate, State farm, Farmers) that have an office the Houston/Harris County mainly because the company they represent has priced them out of the market or flat non-renewing their longtime clients. So you ask how this affects me as I live in Galveston County (League City, Friendswood, Dickinson, Bacliff, Kemah, etc.)
Most of those who own a home in the Galveston County area have both a Home policy and a Windstorm Policy. The Windstorm policy is written through the Texas Windstorm Association and the rates are fixed by the State of Texas for ALL agents that are approved to write the Texas Windstorm Policy. I am seeing increasing number agents from as far as Northern Harris County and other counties a hundred miles or more away advertising “GREAT LOWER RATES FOR WINDSTORM INSURANCE”. I recently got a few in my mail box that was grossly incorrect and is no more than a Bait and Switch attempt as ALL rates are the same as long as the agent is correctly rating the property.
The Texas Windstorm Policy is fairly straight forward with only a few items that can change the policy rate from one agent to the next, so here it is.
· The amount you are insured for (Dwelling and Contents coverage)
· Your deductible amount (1%, 2%, 3%, 5%)
· Building code adjustment
· Replacement Cost endorsement
· Frame vs. Brick Veneer
· Policy type (Homeowner ,Dwelling Fire, Primary or Secondary)
· Wind Driven Rain
· Waiver Program endorsement
The first thing to wrap your head around is to understand that the Texas Windstorm Policy has a co-Insurance clause in the policy. In short it gives you the homeowner the option to insure your home at 100% replacement cost or as low as 80% of the established replacement cost value as calculated by the Texas Windstorm Association’s Replacement Cost Estimator. Be very weary of an agent that tells you that he can insure you at less than 100% replacement cost because they included the Increased Cost Endorsement on the policy. Note that garbage in is garbage out and the information used to calculate replacement cost is only as good as the agent or staff person that inputs the information into the system . Basically, if you are ill advised by an agent and your policy is insured below the 80%, your claim will most likely be adjusted on an ACTUAL CASH VALUE BASIS, less your deductible. So, if you are shopping around for a better rate “BUYER BEWARE!” Many agents that operate outside the local area from where your home is located and quoting you a rate that is lower than your current local agent, they are either reducing your coverage, raising the deductible or changing or excluding coverage that you currently have. They are not looking out for your best interest and they are just price selling and in the end you the customer will pay, generally after you make a claim. This can cost you the customer $1000’s, if not many 1000’s of dollars depending on the loss.
Also, having a local agent from the area you live in can help you immensely during the claim process because you will have someone that has a vested interest in the community in helping you through the claims process. Having an 800 number agent or an agent that is not in the area will put you on your own dealing with the adjuster or claims people and the Texas Windstorm Association. Here is a simple explanation to help understand the factors that govern the value of their home;
· REPLACEMENT COST- This is the amount it will cost you to rebuild your house in today’s dollars!
· MARKET VALUE – This is the amount you will either buy or sell your home for and has absolutely nothing to do with insurance!
· TAX VALUE – Many agents use this to give out a low ball quote on your home and windstorm. An agent should never use this figure because it is generally much lower than the replacement cost and in many cases below the 80% co insurance clause in the policy. You want the Tax value as low as possible as it saves you on annual property taxes!
In closing, the economy is very hard and with gas prices going through the roof, we are all looking to save a few dollars every month. Your home is your largest investment and most costly to you if you under insure it, so don’t get caught up in the wave of agents that deal in making commissions on your misfortune. If you have a question about the cost of your Texas Windstorm Policy, give us a call at 281-338-7797, we have been writing windstorm policies for over 18 years in the area. We would like to assist you.