Texas lawmakers and consumer advocates are calling for sweeping reforms to the state’s home insurance system.
This follows a new report and public press call that revealed what they describe as a crisis of affordability and accountability for homeowners across the state.
During a recent press call hosted by Unlocking America’s Future, Texas House Democratic leaders warned that soaring premiums, mass claim denials, weakened consumer protections and unaffordability have left families paying more for coverage. They claimed that insurance companies have increasingly failed to deliver when disaster strikes.
The discussion coincided with the release of a new report, Texas’s Insurance Crisis: How Homeowners Pay More For Less While Insurers Profit. The report details how Texas has become the third most expensive state in the nation for home insurance while insurers deny nearly half of all claims.
What the report states
According to the report, home insurance premiums in Texas have risen 55% since 2019, pushing costs to nearly double the national average for a $300,000 home and leaving millions of homeowners struggling to afford basic protection. Claim denial rates have also climbed from 35% in 2004 to 47% in 2024, meaning nearly half of Texans who file claims receive no payout at all.
Kyle Herrig, spokesperson for Unlocking America’s Future, framed the crisis as the predictable outcome of policy choices made years earlier. He pointed to a 2017 law backed by insurance industry interests that made it harder for homeowners to sue insurers for wrongfully denied claims and reduced penalties when companies were found acting in bad faith.
“This is no accident,” Herrig said. “This is a system designed to extract maximum revenue from families while providing minimal protection when disaster strikes.”
State Rep. Mihaela Plesa, vice chair of the Texas House Democratic Caucus, said the effects are showing up daily in household budgets across her North Texas district. Families, she said, are forced to weigh insurance premiums against groceries and car repairs.
“You would think that those skyrocketing prices, we’re getting rock solid coverage, but we’re not,” Please said. “That’s where this crisis becomes unacceptable. Families are paying record premiums, and when they finally need help after a hailstorm, a burst pipe, or a roof is torn off because of wind, they’re getting a letter instead of a check. That’s not insurance, that’s extraction.”
“You would think that those skyrocketing prices, we’re getting rock solid coverage, but we’re not. That’s where this crisis
State Rep. Mihaela Plesa
becomes unacceptable.”
Low-income Texans left without home insurance
The burden has fallen especially hard on low-income homeowners. Roughly one-third of low-income Texans now go without home insurance entirely, leaving them vulnerable to total financial loss from a single storm, fire, or flood. As private insurers raise rates or drop coverage in “risky” areas, more homeowners are being pushed into state-backed insurers of last resort, per the report.
Enrollment in the Texas FAIR Plan, which provides home insurance in underserved areas where it is not readily available through the private market, doubled between 2022 and 2024. Meanwhile, the Texas Windstorm Insurance Association, which gives coastal Texans access to wind and hail property insurance, is projected to reach nearly 300,000 policies by the end of 2025, the highest level in its history.
Premiums increasing
State Rep. Josey Garcia tied the data to lived experiences she has witnessed firsthand, particularly among veterans and seniors. Garcia, whose district is in San Antonio, recounted helping elderly residents file insurance claims after catastrophic flooding in the Hill Country, only to see those claims denied or premiums triple overnight.
“This feels criminal. This feels unjust,” said Garcia, arguing that Texans are losing lifetime investments in their homes because insurance has become unaffordable or ineffective.
In the Hill Country regions, families have lost their homes, she recounted, stranded with no clothes and food. When asked for documentation, such as deeds to their old homes, families are unable to provide them as “that has been washed down the river and buried under 10 to 20 feet of mud, along with some souls that weren’t able to be brought back.”
“Texas needs to be at the top of the rung when it comes to affordability, not only for our homes, but most importantly, for our insurance,” Garcia added.
Higher deductibles
Lawmakers also criticised insurers for shifting risk onto homeowners through higher deductibles and cost-cutting tactics. In North Texas, deductibles that once stood at $1,000 have doubled to $2,000, while coastal homeowners often face percentage-based deductibles that can exceed $9,000 before coverage kicks in, according to the report. Insurers have also increasingly relied on aerial photography rather than in-person inspections to assess properties, a method acknowledged by the report to be less accurate but more cost-effective for companies.
Houston-based Texas State Representative Gene Wu placed responsibility squarely on state leadership, arguing that political donations from the insurance industry have stalled meaningful oversight. Wu cited campaign contributions to Gov. Greg Abbott and Lt. Gov. Dan Patrick while accusing state leaders of ignoring warnings that weakening consumer protections would lead to widespread claim denials.
“And you wonder why things never get better,” Wu said. “That’s why, because the people who are in charge of the state, the people who actually fix this, the people who appoint the insurance commissioner, the people who can change the way the state writes its laws and spends its money to make sure that Texans can stay in their homes, they won’t because they’re paid not to. And every Texan, every homeowner, every aspiring homeowner should be enraged about this.”
Speakers called for immediate action from the governor and insurance regulators, including restoring penalties for wrongful claim denials and increasing transparency around claims and deductibles.
What the state’s insurance agency said
The Texas Department of Insurance (TDI) responded to the Defender’s queries. TDI’s data shows that 34.2% of claims were closed without payment in 2024. The data is on the NAIC’s Market Conduct Annual Statement Scorecard (MCAS).
“An insurance company might deny a claim because the policy doesn’t pay for certain types of damage. For example, most policies don’t cover flooding or rodent and insect damage,” TDI wrote in an email. “A company might close a claim without payment if the amount of damage was less than the deductible.”
The agency, which regulates the state’s insurance industry, encourages consumers to review their policies carefully while filing a claim. They can also talk to their agents to help them know what their policies cover. If their claim is denied, consumers should ask their company why. The insurance company must tell them why in writing, TDI suggested.
If the consumer thinks a claim denial is unfair, they can file a complaint with TDI, which can then ask a company to re-examine the policy.
“For premiums, insurance companies look at different factors when calculating what they charge a homeowner,” TDI wrote. “They commonly consider things like where you live, your claims history, your credit score, the cost to replace your house, and your home’s and roof’s age.”
The factors behind recent rate increases include inflation in construction costs, including materials and labor, the frequency and severity of severe weather events, and the cost of reinsurance, a type of insurance for insurance companies to help spread their risk and be financially stable to pay claims.
Premiums have also increased because coverage amounts have risen, per TDI. The average coverage amount increased 42% from $287,900 in 2019 to $408,500 in 2024.TDI’s advice to consumers seeing higher premiums at renewal is to ask their company to explain the increase and ask if they are getting all available discounts.
