Texas Department of Insurance Working for You The Texas Department of Insurance (TDI) regulates the state’s insurance industry. They encourage company competition to make insurance available and affordable. They also help educate consumers so that they can make well-informed insurance decisions.

Homeowners Insurance In Texas

Highlights

• In 2003, state leaders brought all insurance rates in Texas under the authority of the Texas Department of Insurance.
• Since rate reductions were ordered in 2003, many companies made additional rate reductions in 2004 and 2005.
• In 2004, Texas was the only state in which homeowners average insurance premiums declined.
• In a stabilized and competitive market, Texans can save money by shopping around for the right insurance policy for their particular needs.

A Regulatory Shift
In 2003, the Texas Legislature passed and Governor Rick Perry signed into law Senate Bill 14, the most sweeping insurance reforms in recent Texas history. Senate Bill 14 eliminated the "Lloyds" exception that allowed most insurers to avoid TDI regulation over their rates. With this new authority, TDI ordered more than $500 million in rate reductions in September 2003, dramatically cutting rates that had been on the increase during previous years due to the mold crisis.

How Texas Compares to the Rest of the Nation
Homeowners insurance in Texas is a $4.5 billion industry. Historically, homeowners insurance in Texas has been more expensive than in other states due to the size of the state and its exposure to severe weather conditions - specifically, hailstorms and coastal windstorms. In fact, wind and hail losses account for 84 percent of the difference in premiums paid by Texans and those paid by others around the U.S.

In addition to weather exposure, Texas experienced an unprecedented increase in mold-related claims from 1999-2002, resulting in higher rates and a tightening of availability. This situation was exacerbated by the fact that 95 percent of the homeowners market was written by "Lloyds" companies that were exempt from rate regulation. During this time the Texas Department of Insurance (TDI) had no authority over the rates most homeowners paid for insurance.

Don't Confuse Rates with the Premiums You Pay
A "rate" is the base price for insurance, just like the cost of gasoline is based on the price per gallon. There are other factors that affect premiums, or the final amount you pay, besides rates. For instance, changes in deductible, the amount of insurance needed to replace your home in the event of a loss (this usually goes up each year, due to increases in construction costs), and the types of coverage you buy will all affect the final premium you pay.

Consumers: It Pays to Shop
Since the historic reforms in 2003, the Texas homeowners insurance market has stabilized, with rates trending down and more insurers entering the state. Changes in the law also provided more form flexibility for insurers and consumers. This allows Texas homeowners to purchase more tailored insurance that best meets their personal needs. Because of the changes in the market, it is crucial that Texans shop around for their homeowners insurance. It is now possible to save a lot of money and get the policy that best suits an individual's situation by utilizing readily available resources.

To compare prices, the TDI Homeowners Insurance Price Comparison Guide is located at:

www.tdi.state.tx.us/consumer/txshoph.html

To compare policy coverages, the Office of Public Insurance Counsel website offers the following resource:

www.opic.state.tx.us/homeowner.php