Allstate Dropping Windstorm Coverage in Texas Coastal Areas

May 22, 2006

In a move it says will “help protect its ability to meet future customer needs throughout Texas while maintaining a strong presence along the Texas coast,” Allstate Texas Llloyds announced it will phase out windstorm coverage for homeowners in some areas along the state’s coastline.

With nearly 16 percent of the homeowners market in Texas, Allstate is the state’s second largest homeowners insurer after State Farm. Earlier this year it stopped writing new homeowners polices in some coastal areas as well.

Beginning September 15, the company will move the windstorm coverage for current customers in Coastal Zone 1 to the Texas Windstorm Insurance Association (TWIA), the insurer of last resort for windstorm coverage. Coastal Zone 1 includes the following counties: Zone 1: Jefferson, Chambers, Galveston, Brazoria, Matagorda, Calhoun, Refugio, Aransas, San Patricio, Nueces, Kleberg, Kenedy, Willacy and Cameron.

In it’s announcement, Allstate said the move will ensure that customers “have wind protection through an organization that specializes in that peril while keeping their other homeowners coverages with Allstate.”

Also starting this fall, for homes located in the second and third tier of counties inland from the coast (Costal Zones 2 and 3), the company plans to require a 2 percent tropical cyclone deductible (TCD) for those policies not already at that level.

Coastal Zone 2 counties are: Orange, Hardin, Liberty, Harris, Fort Bend, Wharton, Jackson, Victoria, Goliad, Bee, Live Oak, Jim Wells, Brooks and Hidalgo. Zone 3 counties are: Newton, Jasper, Tyler, Polk, San Jacinto, Walker, Montgomery, Waller, Austin, Colorado, Lavaca, DeWitt, Gonzales, Karnes, McMullen, Duval, Jim Hogg and Starr.

Allstate added it is “working out some details on the timeframe, but our goal is to implement these TCD changes as policies come up for renewal.”

The company noted it has purchased additional reinsurance to cover potential catastrophe claims, which likely “will result in higher premiums for the homes most at risk for catastrophic loss, those in coastal areas. However, customers in most parts of the state will see only a minimal impact.”

According to a report in the Houston Chronicle, other insurers that have indicated “they are cutting back or dropping windstorm coverage along the coast include American National Property and Casualty, Texas Farm Bureau Insurance Co., Horace Mann Insurance, Beacon Insurance and Middle States Insurance Co.” Texas Department of Insurance spokesman Jerry Hagins confirmed that list but noted that they all have a relatively small share of the homeowners market in Texas.

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