COLLEGE STATION – Texas is known for many things, but snowstorms and cold winters are not among them. Warmer climates are the norm, so Texas wasn’t equipped for February’s extreme temperature drop. The biggest casualty was the Texas power grid, which essentially froze over, resulting in ongoing and widespread outages. Many Texas homeowners were similarly overwhelmed when the massive cold front led to frozen pipes and other property damage.
“Since the storm, the number of insurance claims have skyrocketed, signaling that this may be among the largest natural disasters ever to hit the Lone Star State,” said Texas Real Estate Research Center Senior Data Analyst Joshua Roberson. “However, many Texans without homeowner’s insurance may be stuck footing the bill, revealing some true risk exposure. Many of those Texans live either in the Rio Grande Valley or along the coast.”
According to the U.S. Census Bureau, over 25 percent of single-family homeowner households in McAllen, Brownsville, or Laredo reported not having homeowner’s insurance. Reasons for not having insurance were not provided, but those familiar with the region know the Valley has some of the lowest health insurance coverage rates not only in the state but nationally. While insurance coverage for both types are relatively lower than in other areas, the underlying dynamics are different. Adjacent data from the Census Bureau may reveal why.
Lower incomes are a common thread among metros with possibly higher uninsured home rates. Average household incomes in the three previously mentioned border metros are among the lowest in the state, ranging from $60,000 to $70,000 per year. However, El Paso, another border town, has similar homeowner household income rates, but it has an uninsured rate closer to the state average of 13.1 percent.
Proximity to the coast is another possible reason for lower coverage rates because of higher premiums combined with lower incomes. Both Corpus Christi and Beaumont had close to 20 percent uninsured.
Finally, home financing has a strong association with insurance coverage as most mortgages require insurance during the term of the note. The Valley has some of the highest percentages of homeowners who own their dwellings free and clear. That can be a double-edged sword if insurance is dropped after the house is paid off.
“Whatever the cause, the end result may mean a longer recovery period for residents in these areas,” said Roberson.
The Texas Real Estate Research Center has a wealth of economic information online for free.