Transcription
Texas homeowners pay some of the highest insurance premiums in the country, and rates are increasing by double digits year-over-year. Fox 4's Shawn Rab is in the newsroom with what Texas lawmakers are trying to do. Sean?
>> Yeah. And what they didn't do this session. There were three bills introduced to address rising insurance rates. None made it to the legislative finish line. Mortgage companies require homeowners to have insurance protection. But right now, no protection for homeowners or those working toward the American dream from increasing insurance premiums.
October 2025. Texas homeowners insurance averaging $6,500 a year, up 79% in some areas, more expensive than the mortgage payment itself for thousands of families. At least four major insurance companies fled the state in 2024 alone. The Texas Fair Plan doubled its policies from 61,000 to 121,000 in just 2 years. People getting forced into last resort coverage with $9,000 deductibles and barely any protection.
And Governor Greg Abbott just held an emergency press conference, his voice cracking as he admitted Texas faces an affordability crisis he can't control. Because here's the truth nobody wants to say out loud: Rising insurance costs aren't just making Texas expensive, they're destroying the housing market entirely. And the state that bragged about being the affordable alternative to California is now becoming unlivable for everyone except the wealthy.
5 years ago, Texas homeowners paid around $1,800 a year for insurance. Affordable, manageable, part of the deal when you bought a house. But between 2018 and 2022, insurance companies in Texas paid out more in claims than they collected in premiums, a 102% loss ratio. They were losing money. And when Hurricane Barrel hit in July 2024, the Texas Windstorm Insurance Association had to withdraw $462.7 million from its catastrophe fund. That left just $8 million heading into the 2025 hurricane season. $8 million to cover an entire coastline.
Now, in 2025, the average Texas homeowner pays $6,000 a year for insurance. Some are paying $9,000, $12,000, $15,000. One Clear Lake homeowner got quoted between $10,000 and $15,000. Another saw his bill jump from $6,000 to $9,000 in a single year, a 78% increase. Insurance companies are requesting rate hikes up to 36%, and the state can't stop them. Because Texas is a "file and use" state, insurance companies can raise rates immediately without waiting for approval.
Abbott declared property tax relief an emergency. He signed $50 billion in tax cuts. He promised to make Texas affordable, but he can't control insurance companies. He can't stop hurricanes, the disaster that broke everything.
Let's go back to February 2021. The winter freeze. Temperatures dropped into the single digits across Texas. The power grid failed. Millions of people lost electricity for days. Pipes burst. Homes flooded. People died. And insurance companies got hit with billions in claims.
Then came the hail storms. Texas has more homes at risk for hail damage than any other state. Most of them concentrated in Houston and Dallas. Every hail storm means thousands of roof claims. Every roof claim costs $15,000 to $30,000. And Texas has been getting hammered by hail storms year after year.
Then Hurricane Harvey in 2017, more than 25 inches of rain in some areas, catastrophic flooding, billions in damage. Then Hurricane Barrel in July 2024. It left more than 2 million people without power. Homes destroyed, trees down, flooding everywhere. The Texas Windstorm Insurance Association had to pay out so much they drained their catastrophe fund.
Then the July 2025 flash floods. Central Texas, Kerr County, the upper Guadalupe River Basin, torrential rains up to 17 inches in places. The river surged more than 26 feet in just 45 minutes. A flash flood swept away homes. At least 135 people died. And here's the brutal part: In FEMA-designated flood zones in Kerr County, fewer than 5% of properties had flood insurance. Thousands of homeowners outside official flood maps suffered devastating damage. No insurance, no help, total loss.
Insurance companies looked at the data and made a calculation: Texas is too risky. The claims are too high. The disasters are too frequent. So, they started pulling out. In 2024 alone, at least four companies exited Texas. Around 10,000 policyholders got non-renewal notices in the mail: "Your coverage is canceled. Good luck finding someone else." Progressive Insurance temporarily restricted agents from selling new homeowners policies, not geographically based, just restricted because it's too risky. Keer stopped covering certain areas entirely. Clear Lake homeowners got letters saying their insurer was leaving. No explanation, just gone.
And the companies that stayed, they started jacking up rates because they had to. Building costs are through the roof, up 40% over the last four years. Lumber prices doubled coming out of 2021 and 2022. Drywall, labor, everything costs more. So, replacing a home costs more, which means insurance has to charge more. The affordability trap nobody saw coming.
Here's what's happening to Texas homeowners right now. You bought a house in 2020. Your mortgage payment was $1,800 a month. Your property taxes were $500 a month. Your insurance was $150 a month. Total monthly cost: $2,450. You could afford that on a $75,000 salary.
Fast forward to 2025. Your mortgage payment is still $1,800. Fixed rate, doesn't change. But your property taxes jumped to $750 a month, up 50% because your home value skyrocketed. And your insurance, it's now $550 a month. That's $6,600 a year, up from $1,800 5 years ago. Your total monthly cost is now $3,100. That's a $650 increase. And you're not getting anything more for that money. Same house, same coverage, just more expensive.
Now, you need an income of at least $150,000 to afford what used to require $75,000. That's a 40% jump in required income. But wages didn't go up 40%. So thousands of families who could afford their homes in 2020 can't afford them anymore in 2025.
Bob Dempsey lives in Clear Lake. He's a former NASA astrophysicist who now works for Blue Origin. His insurance company, Keer, sent him a letter saying they wouldn't cover his area anymore. He spent two weeks shopping for new coverage. Most major insurers turned him down. The ones that offered policies quoted him between $10,000 and $15,000 a year. He worked with his agent to shrink his coverage, more than doubled his hurricane deductible. Even then, his premium went up to $7,500 a year. That's $625 a month, more than his mortgage payment. He and his wife cut travel, cut eating out as they approach retirement. They're thinking about leaving Texas entirely.
John Cobar lives in Clear Lake, too. He's a retired NASA computer analyst. He's been tracking his insurance costs since 2003. In 2003, he paid $750 a year with a $500 deductible. By 2025, he was paying $9,000 a year with a $9,000 deductible. That's not insurance. That's extortion. You're paying $9,000 for the privilege of paying the first $9,000 of any claim yourself. He got forced into the Texas FAIR plan. Limited coverage, last resort. At least it brought him back under $6,000 a year.
Ray Breen lives in Baytown. His premium went up 22% in 2023, then 39% in 2024, then 78% in 2025. He asked his agent what was going on. Their response: Storms in recent years caused a lot of damage. Even though he'd never filed a claim, the carrier had to raise rates across the board. He shopped around and found a less expensive policy, but he knows he'll have to do it again next year and the year after that. The last resort becomes the only resort.
The Texas Fair Plan was created in 1995 as a last resort for people who couldn't get coverage anywhere else. It was supposed to be rare, temporary, a safety net for the truly high risk. In December 2022, the Texas Fair Plan had 61,000 policies. That was already a lot, but by March 2024, that number nearly doubled to 121,000 in just over a year. By 2023, applications climbed to 11,174 policies. In 2024, applications surged to 41,234, the highest increase on record. The organization expects 135,000 policies by the end of 2025. Over 58% of them are in Harris County. Houston, the fourth largest city in America, and thousands of homeowners there can't get private insurance anymore.
Here's what the Texas FAIR plan actually covers: It's expensive. It's minimal. And it's a joke compared to real insurance. You get $5,000 coverage for water damage. That's it. $5,000. If you have a pipe burst and it causes $40,000 in damage, you're paying $35,000 out of pocket. One homeowner had a pinhole leak that resulted in a $44,000 claim. Her private insurer paid it. Her neighbor had a leak a week later. Her Texas Fair Plan had a $6,000 deductible. The claim was only $6,000, so she paid everything herself. Zero insurance payout.
The Fair Plan doesn't cover flood damage. Standard homeowners insurance doesn't cover flood damage either. You need separate flood insurance through FEMA's National Flood Insurance Program, but most people don't buy it because it's expensive and they assume they don't need it until the flood comes and then they lose everything. The Fair Plan also doesn't cover windstorm and hail in coastal counties. You need separate coverage through the Texas Windstorm Insurance Association, another policy, another premium, another deductible. So now Texas homeowners are juggling three separate policies: FAIR plan for basic coverage, TWIA for windstorm and hail, NFIP for flood, and the total cost easily $8,000 to $10,000 a year for coverage that barely protects you.
In December 2024, the Fair Plan assessed participating insurers $17.66 million for its 2023 deficit. And they requested an assessment for the 2024 deficit. That was $60 million. Insurers have to pay it, and they pass those costs on to customers through surcharges. So even if you're not on the Fair Plan, you're paying for it.
Abbott declares emergency. February 2nd, 2025, Governor Greg Abbott stood before the Texas legislature during his State of the State address. His tone was urgent, almost desperate. "Texans are facing an affordability crisis," he said. "That's especially true as it concerns the affordability of owning a home or renting a home." He declared property tax relief an emergency item, not a priority, an emergency. That designation meant lawmakers could fast-track legislation without normal delays. He called for $10 billion in new property tax relief. He demanded that no taxing entity should be able to raise property taxes without 2/3 voter approval. "Last session, we slashed your property taxes," Abbott said. "But for many Texans, those cuts were wiped out by local taxing authorities that hiked your property taxes even more. That must end this session."
The legislature moved fast. By June 2025, they passed House Bill 9, Senate Bill 4, and Senate Bill 23. Abbott signed them into law at a ceremony in Denton, surrounded by lawmakers and business leaders. He was proud, triumphant even. "When I became governor, the homestead exemption was $15,000," he said. "Now it's $140,000, an almost 1,000% increase."
Housing experts pointed out the obvious. Daniel Oni, research director at the Texas Real Estate Research Center at Texas A&M, said rising insurance costs are forcing homeowners to make sacrifices. Spending less on groceries, skipping medications, cutting travel, all just to cover insurance premiums. Older Texans on fixed incomes are especially vulnerable. Many no longer have mortgages, so they're not required to carry insurance. Some are dropping coverage entirely, and if a disaster hits, they can't rebuild. They lose everything. Mark Freedellander, senior director of media relations at the Insurance Information Institute, was blunt: "The spike in insurance costs is squeezing home buyers and homeowners alike. In many areas, insurance now rivals or exceeds mortgage payments, shrinking budgets, and depressing property values. The insurance crisis risks chilling home purchases, worsening affordability issues, and destabilizing the Texas housing market."
The breakdown nobody expected. August 20th, 2025, the Texas Capitol. Governor Abbott stood at a podium flanked by lawmakers. He was there to celebrate the property tax relief bills he'd signed months earlier. But something was different. His tone wasn't triumphant. It was strained, almost defeated.
"Texas has no income tax, no death tax, and no capital gains tax," he said, repeating his usual talking points. But then he paused, his jaw tightened. "We know many Texans are facing an affordability crisis, and we're doing everything we can."
One reporter shouted a question: "Governor, homeowners insurance in Texas is now averaging $6,500 a year. Some are paying over $10,000. Property tax cuts don't cover that increase. What's your plan to fix the insurance crisis?"
Abbott's expression hardened. He gripped the podium. "The insurance market is driven by private companies. The state can't dictate what they charge. What we can do is provide property tax relief. Make it easier to build. Cut regulations. That's what we're doing."
Another reporter pressed: "Governor, four insurance companies left Texas last year. The Fair Plan doubled its policies. Homeowners are getting forced into last resort coverage with massive deductibles. How is that acceptable?"
Abbott's voice rose. "We can't control hurricanes. We can't control climate patterns. What we can control is making Texas more affordable through tax relief and regulatory reform. That's our focus."
But his answer felt empty because everyone in that room knew the truth. Property tax relief doesn't matter when your insurance costs more than your mortgage. Regulatory reform doesn't bring back insurance companies that are losing money. And tax cuts don't protect your home from the next hurricane.
One homeowner interviewed outside the Capitol summed it up perfectly: "He keeps talking about affordability, but he won't talk about the real problem. Insurance is destroying us and he can't fix it. He knows he can't fix it, so he just doesn't talk about it."
The housing market freezes. By October 2025, the impact of the insurance crisis on Texas's housing market was undeniable. Home sales were down across the state, not because prices were too high, but because buyers couldn't afford the insurance. Real estate agents started hearing the same story over and over: Buyers would find a house they loved, make an offer, get their mortgage approved, and then get their insurance quote: $8,000 a year, $10,000, $12,000, and they'd walk away. Because even with a good salary and a solid down payment, they couldn't afford $800 to $1,000 a month for insurance on top of everything else.
Sellers were stuck. They couldn't sell their homes because buyers couldn't afford the insurance. And they couldn't afford to keep their homes because their own insurance kept going up. Some homeowners were spending more on insurance than on their mortgage. And for retirees on fixed incomes, that was unsustainable.
Mortgage lenders started getting nervous because if buyers can't afford insurance, they can't close on homes. And if homeowners can't afford insurance, they'll drop coverage. And uninsured homes are risky collateral for loans. The whole system was breaking down.
New home construction slowed. Why would a builder develop a coastal property when buyers can't get affordable insurance? Why build in a flood zone when flood insurance costs $3,000 a year on top of regular homeowners insurance? Developers started avoiding high-risk areas entirely, which meant less housing supply in the places where people actually wanted to live.
Property values started dropping in high-risk areas: Clear Lake, Galveston, coastal regions, even inland areas prone to flooding or hail. Because who wants to buy a house where insurance costs more than the mortgage? Appraisers started factoring insurance costs into valuations, and homes in high-risk zones were losing value fast. One real estate agent in Houston said it plainly: "Insurance is killing deals. I've had three sales fall through in the last month because buyers couldn't afford the insurance. Not the mortgage, the insurance. That's never happened before."
The families left behind. Jonathan Leupold moved to Houston to chase the American dream: work hard, save money, buy a house, set some roots. But when he started shopping for insurance, he hit a wall. Most major companies wouldn't cover him. The ones that would quoted him prices he couldn't afford. "It was a little frustrating that I had to shop multiple insurance agencies," he said. He kept shopping, didn't get discouraged, eventually found coverage, but it took weeks, and he knows his rates will go up next year.
A retired couple in their 70s lives in Baytown. They bought their home 30 years ago, paid off the mortgage, thought they'd live there the rest of their lives, but their insurance went from $2,000 a year to $7,500 on a fixed retirement income. "That's devastating," they said. They're considering selling, moving to another state, leaving Texas entirely because they can't afford to stay.
A young family in Katy bought their first home in 2023. They were so excited: three bedrooms, good schools, safe neighborhood. Their insurance was $2,400 a year when they bought. By 2025, it was $5,200. Their property taxes went up, too. And their mortgage rate is 7%. They're barely making ends meet. They've cut everything they can: no vacations, no eating out, minimal Christmas gifts for the kids, all just to afford the house they thought they could afford.
A Clear Lake homeowner got a non-renewal notice from his insurer. No reason given, just "we're not covering you anymore." He spent weeks calling companies. Most said no. The ones that said yes quoted him $12,000 to $15,000 a year for a house he bought for $350,000. That's 4% of the home's value every single year. It's unsustainable.
The crisis nobody can fix. Here's the brutal truth about Texas's insurance crisis: Nobody can fix it. Not the governor, not the legislature, not the insurance companies. Because the problem isn't bad policy or greedy corporations. The problem is physics. Climate change is making storms more frequent and more severe. Rising ocean temperatures are producing stronger hurricanes. Texas's growing population means more people are living in harm's way. More homes in flood zones, more homes in coastal areas, more homes at risk.
Insurance is based on risk, and Texas has become too risky. The math doesn't work anymore. If an insurance company charges $3,000 a year but pays out $4,000 in claims, they lose money. And companies that lose money either raise rates or leave. There's no third option.
Texas can cut property taxes. They can reform zoning. They can speed up permitting. But none of that changes the fundamental problem. Texas is in hurricane alley. Texas gets hail storms. Texas has flooding. And those disasters are getting worse.
The Texas Windstorm Insurance Association started 2024 with a nearly $46 million surplus. By 2025, they had a $413.5 million deficit. That's a $460 million swing in one year because Hurricane Barrel destroyed that much property. And Barrel wasn't even a major hurricane; it was Category 1. Imagine what a Category 4 or 5 would do.
Experts predict insurance costs will keep rising. Insurify forecasts Texas home insurance could reach $6,500 or higher by the end of 2025. Some areas could see $8,000 or $10,000. Coastal regions could see even more. And there's no end in sight.
Governor Abbott can't control hurricanes. He can't reverse climate change. He can't force private companies to lose money covering Texas homes. All he can do is offer property tax relief and hope it's enough to keep people from leaving. But it's not enough because homeowners are doing the math. And the math says Texas isn't affordable anymore.
A $300,000 home with a 7% mortgage costs $2,000 a month. Add $600 for property taxes. Add $550 for insurance. That's $3,150 a month. To afford that comfortably, you need an income of $110,000. The median household income in Texas is $68,000.
For decades, Texas sold itself as the affordable alternative: no state income tax, lower cost of living, room to grow. But that narrative is collapsing because insurance costs are making Texas unlivable for everyone except the wealthy. Teachers can't afford it. Nurses can't afford it. Police officers can't afford it. The people who actually make communities function are getting priced out.
And Abbott knows it. You could see it in his face at that press conference. You could hear it in his voice. He knows the insurance crisis is destroying the Texas dream. And he knows he can't fix it.
This is the story of how rising insurance costs destroyed the Texas housing market. And why the state that bragged about freedom and affordability is now becoming a warning sign for the rest of America. And if this breakdown opened your eyes to what's really happening in Texas, hit that subscribe button because this story isn't over. Insurance crises are spreading across the Sun Belt. More states, more disasters, more families losing everything.