The devastating wildfires in California have insurance companies rethinking policies nationwide, particularly in Texas, where droughts, tornadoes, and hurricanes have all become commonplace. When calculating policy coverage, insurance companies consider an array of factors such as location and wildfire and flood risk. These costs have increasingly made insurance more expensive, while some companies have stopped covering certain areas entirely.
The full scope of higher insurance costs remains to be uncovered as the US continues to battle elevated inflation, unaffordable homes for buyers entering the market, and the rising maintenance cost associated with homeownership. This vicious cycle worsens as those most vulnerable people are oftentimes left holding the bill
In recent years, California has seen some of the worst wildfires in its history. These fires, fueled by rising temperatures, droughts, and climate change, have left a lasting impact on the state’s insurance market. In response to the more frequent disasters, insurers have raised premiums all over the US to alleviate the increased financial risks.
Texas holds place as the fourth most expensive home insurance in the US in 2024.
According to Megan Kimble, The Houston Chronicle, the Texas Department of Insurance has reported home insurance rates rose 21% on average in 2023. While Texas is geographically distant from California, hundreds of miles away, the connection of the insurance market means that catastrophic events in one state can significantly impact premiums in another.
Insurance companies are facing increasing claims as a result of the wildfires in California, which have destroyed thousands of homes, businesses, and acreage. This puts additional pressure on the industry and expands the cost for policyholders. This results in many foregoing the necessary coverage to save money.
While Texas has been fortunate enough to avoid wildfires to the extent seen in California, the state is not without its own dangers. Hurricanes, floods, tornadoes, and most recently, winter storms, Texas’ insurance costs will continue to rise for the foreseeable future, making home ownership less feasible for many Texans.
