Homeowners Insurance Cancellation In Texas

Customers in Weatherford, Mineral Wells, Aledo, Springtown, Hudson Oaks, Willow Park, Azle, Millsap, Brock, and other places in Parker County do not have the concerns many customers are facing along the Gulf Coast of Texas when it comes to homeowners insurance policies. Along the Gulf Coast of Texas, State Farm is refusing to renew homeowners coverage with many customers.
The Houston Chronicle ran a story of February 15, 2012, discussing this issue. The title of the story is, “11,000 State Farm Customers Left High and Dry.” The author of the story is Dan Wallach.
Here is what the story tells us:
A Groves man did not wait for the letter he knew was coming. A notice from State Farm that the insurance company was not going to renew his homeowners policy.
The Groves man, Dale Farris, got busy finding another insurer before the number of companies offering general liability and fire coverage dwindled further.
State Farm said it will not renew regular homeowner policies, aside from windstorm coverage, affecting 11,000 customers in parts of Orange, Jefferson, Chambers, Galveston, and Brazoria counties after May 1.
Farris, who has lived at his home on Marion Street for more than 20 years, says he is not surprised by the non-renewal.
State Farm is the largest homeowner insurer in Texas. Company spokesman Kevin Davis said State Farm’s decision does not affect properties in counties south of Brazoria and does not affect every client even in the counties where the 11,000 are being cut.
Davis said, “We must strike a balance between out exposure and our ability to pay claims.”
Alex Winslow, executive director of the consumer advocacy group Texas Watch, which specializes in insurance issues, said State Farm is not repaying longtime customer loyalty with its action.
Winslow said, “The company expects loyalty, but gives none in return.”
Kevin Davis said State Farm homeowner policy customers still can have their motor vehicles insured through the company. Farris said it is unlikely customers would remain because other insurers usually offer discounts for policies that bundle home and car coverage.
Farris’ little neighborhood lies between the Huntsman Port Neches chemical plant and a school in the Port Neches-Grove school district.
The Gulf of Mexico is a 45 minute drive from his home and the Neches River is about three miles to the east, he said.
“At first, the decision was not to write new policies,” Farris said, referring to many insurers offering policies in coastal areas. “That had an impact on folks trying to close on homes.”
He was referring to the completion of the home buying process, which includes showing the mortgage provider and lender there is adequate insurance on the property in case of catastrophe like a hurricane.
Farris, obviously was not in that group.
However, beginning May 1, State Farm will not renew policies for the 11,000 it is cutting off. That means Farris, in April 2013, would not have been able to renew his.
So, he jumped ship a year early, beating the customers who will have to go elsewhere after May 1, by a few months.
His decision was rooted in his fear that other companies would begin to pull out as well or not write a policy for a new customer, which he was going to be.
He found a willing insurer in Farm Bureau. Although Farm Bureau does provide windstorm coverage, it would not do so for Farris’ home because it was built in 1956, too early to have incorporated some of the stronger hurricane-resistant building codes.
Farris said his house suffered only “minor damage” in Hurricanes Rita and Ike. He credits the levee protecting Port Arthur with keeping his home from flooding during Ike in 2008.
After Hurricane Rita in 2005, many insurers announced they were no longer providing windstorm insurance as part of their overall coverage. Then, some insurers announced they were no longer providing policies in areas they considered close to the Gulf.
Farris noted that State Farm’s decision to withdraw coverage would affect the company’s agent the most.
“We talked to our agent,” Farris said. “He’s a good agent. This wasn’t the agent’s decision. The agent is trying to represent the company and the company looks to him for that. Relationships that used to be built – person to person – are not important any more.”
A Texas Department of Insurance spokesman said State Farm has notified the agency of its intent to non-renew a portion of its coastal business over the next 12 months.
“TDI is working with State Farm to ensure that its actions are not in violation of state law,” said department spokesman Jerry Hagins in an email.
Hagins did not however say what possible violations of law could occur.