September 9, 2025
Texas homeowners face soaring insurance costs and limited options. Learn what’s driving the crisis and how to protect your home in a volatile market.
Texas homeowners are facing an unprecedented insurance crisis, with premiums skyrocketing and coverage becoming increasingly difficult to secure. The Lone Star State presents unique challenges that make homeowners insurance both essential and expensive, creating a complex landscape that requires careful navigation.
Rates increased dramatically in 2023 and 2024, according to the Texas Department of Insurance, placing enormous pressure on homeowner budgets. The average annual cost of home insurance in Texas is $4,585. That's 117% more than the national average of $2,110. This dramatic increase has forced many Texans to make difficult decisions about their coverage.
The market upheaval has led to concerning trends. Some homeowners are going without commercial insurance and instead deciding (or hoping) to save money for future property damage. According to a 2024 report by Texas Standard, approximately one in six Texas homeowners went without insurance, citing affordability concerns - a dangerous gamble given the state's severe weather risks.
Insurance companies are responding to mounting losses by withdrawing from the market. Foremost is scaling back its presence in Texas, and Progressive has restricted selling homeowners policies, claiming storms in Texas accounted for nearly 40 percent of the company's losses in the second quarter of fiscal 2024.
Texas faces some of the most severe weather in the nation. According to Cotality research, Texas was the hardest-hit state in the country by hailstorms in 2024, with over 180,000 homes feeling the impact of hailstones larger than 2 inches. North and Central Texas are particularly vulnerable to these catastrophic events.
The most common claims in Texas are for home exterior and roof damage due to wind and hail. Nationally, 1 in 42 insurance claims involve hail and wind damage. The average in Texas is much higher. The frequency and severity of these events continue to drive premium increases across the state.
Coastal Texas faces additional challenges from hurricane exposure. According to climate scientists, Texas has a 70 percent chance of experiencing a hurricane or tropical storm this year, including a 19 percent chance of a major hurricane. This elevated risk necessitates specialized windstorm and hail coverage.
For coastal properties, standard policies exclude wind and hail damage, requiring separate coverage through the Texas Windstorm Insurance Association (TWIA). TWIA currently backs more than 237,000 policies and serves as the insurer of last resort for coastal counties.
Standard homeowners policies exclude flood damage, making separate flood coverage important to consider. Twenty percent of floods in Texas happen outside of high-risk areas, meaning even inland properties face significant exposure. The National Flood Insurance Program (NFIP) or private flood insurance may provide additional protection for comprehensive coverage.
Roof characteristics significantly impact insurance availability and pricing. Properties with roofs 15 years older may face surcharges or coverage denials. Some carriers will only pay actual cash value on older roofs rather than replacement cost, dramatically reducing claim payouts.
Texas's prevalence of slab foundations creates unique coverage challenges. In Texas, insurers specifically exclude slab foundation repairs due to soil movement. Insurers consider clay soil-related cracking as a known risk not covered by default. However, optional foundation coverage endorsements (often approximately 15% of dwelling limit) can be added to cover damage from plumbing leaks under the slab.
The Texas Supreme Court held that the standard homeowner's policy Form HO-B covers foundation damage from slab movement caused by plumbing leaks. This makes foundation water damage riders particularly valuable for Texas homeowners.
Texas homes often cost more to rebuild than their market value, making accurate Coverage A calculations critical. Property values have surged, and construction costs have increased dramatically, requiring regular coverage reviews to avoid underinsurance.
Texas's comparative negligence laws and litigious environment may warrant consideration of higher liability limits. The state's legal climate often makes $300,000 or higher liability coverage a prudent minimum, potentially protecting homeowners from devastating lawsuits.
Texas homeowners have three primary policy options:
Given the state's unique risks, several endorsements may prove particularly valuable:
*Projected 2024 rate
**National average data
Oklahoma has highest rates at $6,210 a year, or about $518 a month, on average. Texas averages $4,585 a year, or about $382 a month. While Texas homeowners pay significantly more than those in Arkansas and New Mexico, they still face lower costs than Oklahoma and Louisiana, both of which experience similar severe weather patterns.
Navigating Texas's complex insurance landscape may benefit from expert guidance and professional support. For insurance servicers looking to enhance their customer experience while reducing operational costs, partnering with Covered offers a potential solution. Covered provides warm transfers designed to connect customers with licensed agents who can assist in identifying coverage options that may help manage risk and cost. This partnership approach aims to improve the customer experience by ensuring policyholders feel supported throughout their insurance journey, while potentially helping servicers reduce call center operational expenses through expert guidance and streamlined processes.
The Texas insurance market faces continued challenges as climate change intensifies weather events and construction costs remain elevated. Homeowners insurance rates climbed by nearly 19% in 2024, according to the Texas Department of Insurance, slightly down from more than 21% the previous year.
Homeowners may consider several steps to potentially improve their insurance position:
Texas homeowners face challenging market conditions, but understanding the risks and coverage options may enable better decision-making. The state's unique combination of severe weather risks, construction costs, and legal environment creates a complex insurance landscape requiring careful navigation.
Working with experienced agents who understand Texas-specific risks and coverage needs may help homeowners better assess their options and identify appropriate coverage. As the market continues evolving, staying informed about policy options, risk mitigation strategies, and available assistance programs could help homeowners maintain adequate protection while managing costs effectively.
Success in Texas's homeowners insurance market may be supported by proactive planning, thorough coverage evaluation, and professional guidance to navigate the increasingly complex landscape of risks and options.
Disclosure: Coverage availability, pricing, and policy terms vary by insurer and may be subject to underwriting approval. This article is for informational purposes only and does not constitute legal, insurance, or financial advice. Always consult a licensed insurance professional for guidance specific to your situation.
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*Savings claim based upon averaging actual anonymized savings data for dwelling-only insurance rates paid (from July 2023 - June 2024) by customers of two of Covered’s largest mortgage industry partners across twenty-seven (27) US states. Bundles and non-dwelling insurance coverages were excluded.
† Net Promoter Score (“NPS”)® calculation averages post-purchase customer satisfaction surveys from 9/24/2024 - 2/28/2025. NPS® is a market research metric measuring customer satisfaction with a scoring calculation that incorporates both detractor and promoter customer feedback.
Quotes are presented solely for your convenience. Savings may vary. Rates are subject to change based upon the specific coverage you select and other factors that apply to your situation. CA License #0M81402, doing business as Cubbard Insurance Solutions in California.
