Why are our home insurance policies so damn high in the Bay Area?

Glad you asked. Take a seat and read about the history of insurance reform in Texas.

Many years ago I was a consumer activist advocating for consumers with a construction defect in their new homes. I volunteered my time and money beginning in the mid 1990’s up until 2011. During that time I saw the Texas Legislature usher in home insurance reform with promises of lower rates and fair marketing practices. At the time Governor Rick Perry issued this statement:

“This comprehensive reform measure will stabilize the home and auto insurance market, rid the insurance industry of fraudulent practices and ensure Texans have access to fair rates offered in a competitive market,” Perry said during thesigning ceremony at a home construction site in Temple. “For some Texans that will mean significant rate discounts. For all Texans it will mean rate practices that are transparent and fair.”

That was 20 years ago. So how did that work fer ya cowboy?

In the beginning, or about in 2002.
In 2002 insurance rates was a huge campaign issue. Rick Perry won reelection promising to reform insurance, releasing the power of the free market to do their thing. Prior to 2003 insurance companies had to justify rate increases prior to raising rates. They also had to provide all inclusive policies covering fire, water, wind, storm etc. For consumers it made it easy to compare rates.

Then 2003 happened
The state decided to change to a file and use system where companies filed their new rates and started using the new rates immediately. The Texas Department of Insurance (TDI) could, after the fact, challenge the rate increases. TDI challenged few if any. They also let insurance companies offer just the basic policies that cover only wind, storm, and water events. Some how they let them adjust the cost to rebuild the home which in my case increased by 50% in one year causing the premium to skyrocket. They let the companies remove coverage such as foundation, water, and sewer damage but they didn’t have to adjust the premiums to account for the lost coverage. In my case I had to actually buy it back.

20 Years later
Just look at your policy. We are getting royally screwed. Premiums have skyrocketed. Companies have left the area. Deductables are so high you wonder why you have insurance in the first place! Again in my situation I eventually left USAA after they raised my premiums from $4000 to $5000. The cost to rebuild is over $440,000 making my deductible $8800!!!! I have documented most of the years from 2000 to just a few years ago. You can see that information below.

Politically speaking
Our State Representative Dennis Paul is on the insurance committee. You might want to ask what in the living hell he has bee focusing on besides insurance rates in his district. Maybe he is too busy protecting guns, praising god, and limiting the rights of gays.

My Premiums Before and After Insurance Reform of 2003:

2000: $783\year $500 deductible HOB policy all inclusive.

2014: $3800\year $4800 deductible HOA with foundation, water, and sewer optional

Historic Increases of my Premiums Since 2000:

2000$783.00$500.00 0.00%Before insurance became an issue
2001$862.00$500.00 10.00%Removed mold coverage but did not decrease premium
2002$1,060.00$500.00 22.90%Became an election issue
***2003$1,375.00$500.00 29.70%Includes a 7% reduction and use of HO-A Policies
2004$1,589.00$500.00 15.40%Insurance reform in 2003. Had to add back water, foundation and sewer coverage
2005$1,352.00$500.00 -14.90%No change in policy
2006$1,363.00$2,400 <1%Deductible increased
**2007$1,600.00$2,400 15.10%Rebuild cost 50% higher
*2008$1,900.00$2,400 18.00%Tier II classification
2009$2,300.00$2,400 21.00%No change in policy
2010$2,800.00$4,800 24.00%Doubled deductible.
2011 $4,800 No change in policy
2012 $4,800 No change in policy
2013$3,300.00$4800 No change in policy
2014$3,800.00$4,80015.00%No change in policy

*Reclassifying your home in a “tier zone”. This resulted in an 18% increase to my rates in 2008. The TDI had no comment when this was brought to their attention. Next year USAA could create yet another type of tier zone and the TDI will do nothing.

**Using a different system to determine the cost to rebuild a home. 
This resulted in an increase of 50% in the cost to rebuild my home, and a 15% increase in premiums. This new cost to rebuild the home was based upon a “new” method created by USAA. 

***Removing protection. USAA changed to an HO-A type of policy making sewer, water, and foundation damage optional to save money for those who do not want or can’t afford the coverage. Unfortunately, when they removed the coverage, they did not reduce the rates. When I added the coverage back into the policy it resulted in an 29% increase.

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