Looking for an alternative to FAIR Plan insurance in Texas? Multiple insurance claims or high risk? Fill out this easy home insurance quote form!
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As a result of private insurers who are wary of high risk areas of Texas, the Texas Legislature responded by creating the Texas FAIR Plan Association (TFPA). Its purpose as the homeowners insurance market of last resort; is to provide qualified property owners basic property insurance when the private market declines to offer coverage usually after fling too many claims .
Like most FAIR Plans, the Texas FAIR Plan typically offers basic coverage rather than a comprehensive policy. The FAIR Plan does not compete with the private market and applicants must be declined by at least 2 private insurers in order to obtain coverage under the plan. Even though the FAIR Plan is a market of last resort, consumer properties are subject to underwriting guidelines similar to private market insurers. Properties deeded to businesses or vacant/unoccupied properties may not be eligible for coverage.
The FAIR Plan typically uses the Dwelling Policy for actual cash value coverage (replacement minus depreciation) and the HO-A form for replacement cost coverage (new for old). Due to the high risk, to be eligible for the HO-A policy, the consumer must insure the property for 100% of its replacement cost value.
A recent Kiplinger report lists Texas in the top 10 states that are most at risk of disaster and the volume of homeowners insurance claims and payouts in the state reflects this fact. Common weather occurrences across the state include severe thunderstorms and tornadoes while the southern coastal areas remain in the bulls-eye of crippling hurricanes such as Hurricane Ike in 2008. Areas of the state also experience extreme heat and draught which commonly results in disastrous wildfires claiming thousands of homes and forests. Texas offers two counties on the list of most vulnerable to hurricanes: Polk and Walker Counties.
Because of tropical cyclone and tornado risks in the state, Texas has also implemented the Texas Windstorm Insurance Association, a type of FAIR Plan which is similar to Florida, to accommodate those homeowners in coastal areas where the private market is reluctant to offer coverage due to the high risk. The drawback is that typically the wind peril is excluded. This allows the property owner to purchase the more comprehensive coverage from the private market and then add the wind coverage through the Texas Windstorm Insurance Association.
As with all FAIR Plans, consumers are urged to try to find coverage in the private market and we can help you find an agent that can help you find alternatives to the FAIR Plan.