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A careful reading of insurance policies can avoid unpleasant surprises

It was recently reported in the Dallas Morning News that Texas has some of the highest homeowners' insurance rates in the nation. The website NetQuote.com observes that while Texans are generally pleased with the notion that everything is bigger in Texas, the fact that homeowners' insurance quotes are "a little larger-than-life is hardly something most residents feel is worth celebrating." An often asked question is why Texas homeowners' insurance policies are so pricey in comparison with other states in our federal union.

The Texas-based Insurance Education Group says that our homeowners' insurance premiums are high given that Texas is prone to catastrophic weather conditions. If it were just hurricanes and tornadoes, homeowners' insurance in Texas might not be as expensive as it is. The problem, however, is that there are other natural disasters that cause property destruction. For example, severe windstorms and hailstorms plague a large portion of Texas causing considerable property damage each year during the spring and summer.

The Texas Office of Public Insurance Counsel adds that, aside from catastrophic storms, there are other reasons why Texas insurance rates are high. According to OPIC, overhead costs, agent commissions and advertising are all higher in Texas than in most other states. OPIC also observes that, at the moment, most Texas insurance companies are focused on significantly increasing their profit margins.

Read your policy

While homeowners may not be able to prevent the periodic rate increases sought by insurers, they can try to ensure that they get what they think they are paying for when it comes to homeowners' insurance coverage.

In Texas and elsewhere, insurers are becoming more aggressive in maximizing profits. A Time magazine article notes that, while insurance rates have climbed significantly over the past several years, insurers have also been scaling back basic coverage, hiking deductibles and using contract language in insurance policies to add new restrictions and exclusions.

It is observed in the Time article that insurance consumers tend to shop around for insurance based on: (1) the price of a policy and (2) the general reputation of an insurer. However, what many customers are not fully aware of is that important policy provisions detailing what is excluded from coverages are "often written in legalese and buried in a policy that runs dozens of pages." As a result, if misfortune befalls your home, you may be paying out of pocket tens of thousands of dollars in costs for damages that you had assumed were covered by your policy.

Unfortunately many homeowners fail to take time to read their policies and, even if they did, they may not realize how one phrase or one word, if construed in favor of the insurance company, could mean that they will foot a significant amount of the repair bills.

The Texas HelpInsure.com website advises that you need to read any insurance policy you are considering before you buy it. Pay special attention to the exclusions section which lists the things your policy does not cover. Also read the declarations page which shows the amount of each of your coverages and deductibles. High deductibles mean you will end up paying more out of pocket.

Seek legal help

In many cases, a dispute with an insurance company over payment of a homeowners' insurance claim boils down to an interpretation of the relevant insurance policy language. If an insurance company is not paying you what you believe you are entitled to, you should contact a Texas attorney experienced in handling insurance disputes.