Storms bring big changes in home insurance policies

As Hurricane Beryl with sustained winds at 155 mph heads toward the Gulf of Mexico by Friday, people in Orange County are once again watching weather forecasts with anxiety.

The constant barrage of storms during the past 19 years has left some insurance companies dropping coverage on all policies for this area. It's a national trend.

Linda Nies of Dallas Insurance Agency in Orange, said coverage is still available through various companies, but the costs of coverage are going up.

The Texas Tribune, a non-profit online publication, reported in November that homeowner rates across the state are averaging a 22 percent increase during the past year, double the national average of 11 percent.

"The insurance business in the Gulf Coast area is subject to a volatile atmospher at the present time," said Ellen Nickum, owner of ANE Insurance in Bridge City. "Insurance prices are rising at a rapid and unpredictable pace, with limited control of the insurance agent."

Both Dallas and ANE companies are independent agents who can work with a number of different companies. Those kind of agents can check those companies to help people wanting to buy policies to find the right company for their needs.

But as everyone along the Texas coast watches, the upper coast with Orange County appears okay at this time. As of Tuesday evening, the National Hurricane Center forecasts the storm to move into the upper Mexico and lower Texas coastal area.

Nickum said she has seen some companies withdraw from covering the area, but they later come back.

Some companies are also "grandfathering" longtime clients into their policies, but not making new policies for any houses south of Interstate 10 along the Gulf Coast, while others have dropped Orange County totally.

One large company has even stopped policies in Texas as more hurricanes, floods, and wildfires hit the state.

Wildfires in California have led some companies to drop areas of that state and on Monday, State Farm announced a 30 percent increase for homeowner policies in that state.

Nies said she understands how the insurance companies need to raise the rates to stay in business and protect the properties they already have covered. If a catastrophe occurs, the insurance companies need to have enough money to pay the claims.

The Texas Tribune interviewed Steven Rothstein, the managing director of the Ceres Accelerator for Sustainable Capital Markets, a non-profit organization that advocates for sustainable investment practices in the finance industry, which includes insurance companies.

"The risks on (insurance companies') balance sheets are very significant and growing. This is happening across the country, and across Texas. It is not just coastal Texas."

Homeowner policies issued by private companies are different than flood insurance. Congress created the National Flood Insurance Plan in 1968 with a federally-financed insurance program started under FEMA after private insurers stopped covering flood damages.

The program was solvent until 2005 after Hurricane Katrina struck the Gulf Coast. The country has been inundated with dozens of bad floods since then, including spring floods that hit Jasper and other East Texas counties.

Nies said flood insurance rates have also been rising with recent newly drawn flood maps. She said for people who have had flood insurance before the new maps, their rates are going up a percentage each year until they reach the full price.

People who did not have flood insurance before, or those seeking flood policies on newly-acquired houses, will pay the full rate.

The future may hold a time when a homeowner's monthly insurance payment is as much, or more, than the monthly mortgage payment.

Nies said she sympathizes with retirees, even though many have paid off their mortgages. She said they plan for their income and costs in retirement, and it keeps going up.

But then, retirees aren't the only ones suffering. Families with school-age children trying to save for post-high school education and paying house payments are seeing their costs rise, too.

"It's hard on everyone," Nies said.