Will Florida Hurricanes Cause Texas Insurance Rates to Rise?
As of the 0100 CDT Intermediate update from the National Hurricane Center the center of circulation of Category 5 Hurricane Milton was located southeast of Galveston. The distance in air miles is a little over 300. Fortunately for cities along the Texas coast such as Galveston, Corpus Christi, Freeport, and South Padre Island, the storm is moving away from the Texas coast.
The story is quite different for residents along Florida's western coast. The area in and around Tampa Bay is being mentioned as the most likely place where Milton's fury will cross the coast. That landfall from the hurricane is expected to happen late in the afternoon or early evening hours of Wednesday.
Forecasters with the National Hurricane Center believe the storm will weaken before it makes landfall but should still impact western Florida as a Category 3 storm on the Saffir-Simpson scale. The storm will likely create a tornado threat for much of the Florida Peninsula on Wednesday into Thursday.
The damage from Milton is expected to be catastrophic in many places along the beach. Inland houses and businesses will likely be damaged by wind, water, and flying debris. That will mean claims against insurance policies. Since many companies who do business in Florida also do business in Texas will this mean a ricochet effect for insurance rates as those insurers attempt to cover costs paid out on policies?
At first blush, the answer for insurance industry experts is good news for Texas policyholders. There should be only minimal impacts on Texas rates because of Hurricane Mitchell and last month's Hurricane Helene.
The effect that Hurricane Beryl has had on Texas rates, well that might already be a foregone conclusion if you were affected by that storm. But for the majority of Texas policyholders, the only increase might come as insurance companies seek to protect themselves through reinsurance.
That's where insurance companies pay to insure themselves over the potential payout of their policyholders. It sounds a lot like "cookin' the books" but it is an accepted practice and if it doesn't mean you or I have to pay out more for our homeowners' policy I think we're all in on it.
There could be an overall increase in policy rates nationwide because of the active storm season. Should that happen it would most likely be a function of higher rates in the reinsurance market. And you better believe the insurance agencies will pass those increases right to your bottom line.
In the meantime, if you haven't secured flood insurance for your property or if you haven't had your roof inspected, you might want to get that done. Having flood insurance no matter where you live in Texas is always a great idea. It's always better to know for sure ahead of a storm. Another way to save on your insurance is by having your roof fortified or replaced. That can also put you "money ahead" on your insurance too.
Meanwhile, let's pray for Florida and all of those who are still hurting from the most recent storms. I think in Texas we all know that one day, that's going to be us in the bullseye. So we offer good thoughts for the safety of everyone in the Gulf South.
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Gallery Credit: Landon King