Texas homeowners are madder then heck about their exorbitant home insurance premiums and they're not taking it anymore, according to new consumer complaint data released by the Texas Department of Insurance (TDI). The figures show that between Jan. 1 and May 31, 2001, there were just 24 formal home insurance rate complaints filed with the TDI. But that figure zoomed to 962 for the same period in 2002.

"The numbers don't surprise me," says Rod Bordelon, the state's Public Insurance Counsel, who represents Texas consumers in insurance matters. "We've seen a rapid increase in [mold and other water-related] claims, premiums, and nonrenewals [of home insurance policies]."

According to Bordelon, these factors — combined with the current propensity among Texas home insurers to deny coverage to customers with previous multiple home insurance claims — has created a Perfect Storm scenario for extreme turbulence in the home insurance market and a lot of unhappy consumers.

Allstate leads the pack

In the first five months of 2002, Texas consumers complained more about Allstate Texas Lloyds than any other Texas home insurer. Although the Allstate Insurance Co. subsidiary had only a 13.3 percent share of the Texas home insurance market, it drew 398 rate complaints, more than a third of the 962 complaint total.

We're disappointed to hear it," says Allstate spokesperson Justin Schmitt. However, Schmitt says the complaint numbers include both justified and unjustified rate complaints. "You have to take the good with the bad," says Schmitt. "Texas is a very tough place to be a property and casualty insurer right now. You have to remember that we were the first in Texas to offer a new home insurance product that costs 20 percent less than the old HO-B policy and we're still selling new [home] policies."

Schmitt is referring to a beefed-up version of the standard home insurance policy that includes coverage for accidental water damage, such as that caused by burst water pipes. However, the new policy caps remediation of mold damage resulting from covered water damage at $5,000.

He is also referring to the fact that State Farm Lloyds, the Texas property insurance affiliate of State Farm Insurance Co. and the largest home insurer in the state, quit selling home insurance policies to new customers in Texas in 2001. That same year, Farmers Insurance Group, the third-largest home insurer in Texas, also quit selling comprehensive home insurance policies in Texas that include coverage for water-related losses.

Mold growing

To a large extent, a leap in mold and water-related claims is fueling the hefty home insurance rate increases. The new TDI figures are staggering: The estimated number of home insurance claims in the first quarter of 2000 was only 1,050, but that figure skyrocketed to nearly 15,000 by the fourth quarter of 2001. The total number of mold claims for those two years was more than 44,000. And those claims cost Texas insurers more than $1 billion.

In February 2002, Texas Gov. Rick Perry requested that the state's Attorney General investigate home insurance pricing increases by State Farm, Farmers, and Allstate. That investigation is ongoing.