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There is a great article in the WSJ about limited coverage on policies
After Freeze, Insurance Comes Up Short for Many Texans
By and | Photographs by Brandon Thibodeaux for The Wall Street Journal
July 5, 2021 5:30 am ET
Months after February's freeze, many Texans are still living in damaged homes after learning too late that they had inadequate insurance.
The extreme weather that caused days of blackouts in the Lone Star State has triggered one of the costliest and most unusual insurance events in Texas history, when indoor plumbing froze and exploded in homes bereft of heat.
The damage is expected to cost insurance companies $18 billion in Texas and surrounding states, according to risk-modeling firm Karen Clark & Co., akin to the impact of a major hurricane.
Some homeowners have been left to deal with losses that their insurance doesn't cover. Many have discovered that their policies limit payouts on plumbing-related water damage, often at $5,000 to $10,000—well below what they need....
The capped policies are the result of a deregulatory change Texas made nearly two decades ago, when a rash of mold claims and lawsuits increased costs, which threatened to drive out insurers and make insurance unaffordable for many in a state that prides itself on a lower cost of living.
Before the change, insurers in Texas largely used a state-crafted homeowners insurance form that generously covered many types of damage.
In the 2003 move, Texas allowed insurers more flexibility in their policies as a way to manage their risk exposure, subject to state approval of their forms—and left consumers to figure out what coverage was best for them.
State officials say they don't have data on how many homeowners with burst pipes from the February freeze had policies capping plumbing-related water damage. Lawyers and others involved in the emerging-claims disputes estimate they number in the thousands. Hundreds have sought lawyers to sue insurers or their agents. Eric Dick, an insurance agent and lawyer in Houston, said at least 10% of Texas homeowners policies he has reviewed in recent years included the so-called sublimits....
The Texas situation is one of the worst outcomes for consumers after more than 25 years of tinkering by U.S. property insurers with what were once fairly standardized policy forms. Insurers have sought to address coverage features that they say cost more in payouts than the policies are priced to cover.
The result has been an array of changes in policies nationwide in the state-regulated industry, many of them shifting costs to homeowners. In hurricane-prone states, for example, policies now typically include special "hurricane deductibles."
Many consumers have "little idea of what they are buying other than a general sense that it is homeowners insurance," said Daniel Schwarcz, a University of Minnesota Law School professor who has studied the move away from standard forms.
While consumers can turn to advisers, many commission-paid agents pay more attention to the bigger and more expensive policy forms bought by well-to-do customers, said Jon Henningsgard, a longtime Texas commercial insurance broker.
"You're a kindergartner in a master's class," he said of homeowners weighing policies."
There is a lot more to the article and what I did share is very abridged, so please consider reading it, esp if you are a P&C agent.
After Freeze, Insurance Comes Up Short for Many Texans
By and | Photographs by Brandon Thibodeaux for The Wall Street Journal
July 5, 2021 5:30 am ET
Months after February's freeze, many Texans are still living in damaged homes after learning too late that they had inadequate insurance.
The extreme weather that caused days of blackouts in the Lone Star State has triggered one of the costliest and most unusual insurance events in Texas history, when indoor plumbing froze and exploded in homes bereft of heat.
The damage is expected to cost insurance companies $18 billion in Texas and surrounding states, according to risk-modeling firm Karen Clark & Co., akin to the impact of a major hurricane.
Some homeowners have been left to deal with losses that their insurance doesn't cover. Many have discovered that their policies limit payouts on plumbing-related water damage, often at $5,000 to $10,000—well below what they need....
The capped policies are the result of a deregulatory change Texas made nearly two decades ago, when a rash of mold claims and lawsuits increased costs, which threatened to drive out insurers and make insurance unaffordable for many in a state that prides itself on a lower cost of living.
Before the change, insurers in Texas largely used a state-crafted homeowners insurance form that generously covered many types of damage.
In the 2003 move, Texas allowed insurers more flexibility in their policies as a way to manage their risk exposure, subject to state approval of their forms—and left consumers to figure out what coverage was best for them.
State officials say they don't have data on how many homeowners with burst pipes from the February freeze had policies capping plumbing-related water damage. Lawyers and others involved in the emerging-claims disputes estimate they number in the thousands. Hundreds have sought lawyers to sue insurers or their agents. Eric Dick, an insurance agent and lawyer in Houston, said at least 10% of Texas homeowners policies he has reviewed in recent years included the so-called sublimits....
The Texas situation is one of the worst outcomes for consumers after more than 25 years of tinkering by U.S. property insurers with what were once fairly standardized policy forms. Insurers have sought to address coverage features that they say cost more in payouts than the policies are priced to cover.
The result has been an array of changes in policies nationwide in the state-regulated industry, many of them shifting costs to homeowners. In hurricane-prone states, for example, policies now typically include special "hurricane deductibles."
Many consumers have "little idea of what they are buying other than a general sense that it is homeowners insurance," said Daniel Schwarcz, a University of Minnesota Law School professor who has studied the move away from standard forms.
While consumers can turn to advisers, many commission-paid agents pay more attention to the bigger and more expensive policy forms bought by well-to-do customers, said Jon Henningsgard, a longtime Texas commercial insurance broker.
"You're a kindergartner in a master's class," he said of homeowners weighing policies."
There is a lot more to the article and what I did share is very abridged, so please consider reading it, esp if you are a P&C agent.
