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Disaster Insurance in Texas (2023)

Natural disaster insurance covers natural cataclysms that are typically not covered by basic Texas property insurance. For example, standard homeowners and renters insurance already cover wind and hail damage, but they do not cover earthquakes and floods that come in from the outside of the structure. Neither does a standard commercial property insurance policy. Flood and earthquake insurance can be purchased as stand-alone coverage or as an optional add-on to the main property insurance policy.

Texas residents spend over $500 million on disaster insurance coverage every year.

In 2023:

  • The average cost of Flood insurance in Texas is $150-$200 per month (when compared among Federal and Private flood insurance companies). Renters can get coverage starting as low as $10.

  • The average cost of Earthquake insurance in Texas is $15-$20 per month (if added to your home or commercial property insurance policy as an add-on rider). The much lower cost compared with the rest of the country is explained by a very low risk of earthquakes occurring in the majority of Texas.

    Prices will differ drastically based on the location and the risk exposure of the insured property.

Speak with a Texas-licensed insurance agent to discuss the type of natural disaster/catastrophe insurance you may need based on the prevalent natural disasters near you.

Does Disaster Need Insurance Coverage?

Yes, typically, insurance is needed for any situation where damage or loss will likely be too expensive to cover out-of-pocket. Sometimes, natural disasters occur out of the blue and without any notice and when they occur, they result in major damages. Only some natural disasters are predictable. For instance, an algorithm developed by Texas A&M researchers can correctly predict the flow of floodwaters during weather events like hurricanes. However, the effect of these disasters can only be mitigated to prevent more hazardous consequences. In most cases, nothing can be done to stop the disasters from happening even after they have been predicted. Besides, in the case of floods, the Federal Emergency Management Agency (FEMA) maintains that all Texans are at risk for floods, irrespective of the city or county in Texas where they reside.

When natural disasters occur, they result in very expensive damages that can throw a person off-balance financially. For instance, floods can affect multiple houses at the same time and completely destroy the affected houses, necessitating reconstruction and rendering the homeowners homeless. But with natural disaster/catastrophe insurance, even when catastrophic situations occur, and the resulting damages are massive, you will have peace of mind that your insurance will cover the damages incurred. Disaster insurance generally protects your covered properties because disasters are often beyond human control.

What Types of Disasters are Insurable in Texas?

Natural disasters that are common in Texas are all insurable. Such disasters include:

  • Earthquakes,

  • Floods,

  • Hurricanes, and

  • Tornadoes.

These major disasters require supplementary insurance, implying that they are not covered by homeowners or renters insurance policies. Homeowners insurance only covers damages from fire, lightning, wind, or hail storms.

What Type of Disasters are not Insurable in Texas?

Typically, natural disasters that occur in Texas are insurable. There are specific supplementary insurance policies for each natural disaster in Texas, except the mild ones covered under homeowners insurance, including wind, wildfire, and hail.

What are the Types of Disaster Insurance in Texas?

In Texas, natural disaster/catastrophe insurance is available to help victims of natural disasters to recover from damages incurred during natural disasters in the state. However, disaster insurance in Texas is not a one-size-fits-all type of insurance. This means that you will have to buy specific policies to protect against specific disasters, so if you purchase flood insurance, it will only protect you from floods and not earthquakes.

The term disaster/catastrophe insurance only refers to a group of insurance policies purchased to prevent financial losses resulting from natural disasters. They are usually purchased as an addition to standard homeowners, renters, and commercial property insurance policies, that do not cover major natural disasters, particularly those that result in expensive repairs.

The types of disaster insurance policies available in Texas include:

Earthquake Insurance

Earthquake insurance protects an insured business, home, or any Texas property against earthquake damages. Earthquakes mostly result from explosive volcanic eruptions, changes in substructures from manmade activities, and shifting tectonic plates and faults. This insurance typically provides dwelling coverage, personal property coverage, and additional living expenses (ALE) coverage if a policyholder has to temporarily relocate to another place after an earthquake.

Flood Insurance

Flood insurance is designed to help individuals who own homes and businesses in flood-prone areas in Texas to avoid financial losses caused by flood damages. Generally, Texas is a flood zone, and it mostly experiences floods between April and September. Flood insurance mitigates the impact of flood disasters in the state by providing building and contents coverage to policyholders. Flood insurance covers only damages caused by floods induced by heavy or prolonged rain, melting snow, blocked storm drainage systems, coastal storm surges, or levee dam failure. Hence, a house flooded because of a leaking roof is outside the scope of flood insurance.

Windstorm Insurance

The Texas Windstorm Insurance Association (TWIA) provides windstorm insurance to 14 Texas gulf coast counties and a part of Harris County. Conversely, the Texas FAIR Plan Association (TFPA) provides limited coverage to other parts of the state. These counties include Aransas, Brazoria, Calhoun, Chambers, Cameron, Galveston, Jefferson, Kleberg, Kenedy, Matagorda, Nueces, San Patricio, Refugio, and Willacy. In Texas, windstorm insurance covers damages caused by wind, tornadoes, hurricanes, gales, and hail to insured residential or commercial property. Windstorm insurance typically provides dwelling coverage, other structures coverage, loss of rent coverage, and personal property coverage. Windstorm insurance also provides additional living expense coverage or loss of use coverage if the insured cannot occupy their residence within a specified period due to wind or hail damage.

Do you Need Disaster Insurance in Texas?

Yes. It is advisable to get natural disaster/catastrophe insurance to protect your residential and commercial assets from damages or losses caused by specific disasters that your county or city is susceptible to. Generally, damages or losses resulting from natural disasters are relatively too expensive to cover out-of-pocket. For instance, in Texas, it has been estimated that as little as one inch of water can cause $25,000 in water damage to your residence. Therefore, it is only logical for a person to get disaster insurance, specifically flood insurance policy, if they reside in a flood-prone area. The same applies to any other type of disaster that is common in Texas. Persons with financed properties may also be required by their lien-holders to get disaster insurance, depending on whether their property is located in an area susceptible to certain natural disasters.

Note that standard homeowners and renters policies do not cover most natural disasters. They only cover mild winds, sporadic tornadoes, and seasonal hail storms. This is why you need disaster insurance coverage, especially if you stay in an area with a specific type of natural disaster. Areas where specific natural disasters are common include:

  • Tornado - Texas has the highest average yearly number of tornadoes in the United States. Areas with the most tornadoes are cities close to the Gulf Coast, Tornado Alley, North Texas, and Panhandle. Galveston County, Johnson County, Harris County, and Hale County are some counties in Texas that experience tornadoes.

  • Flood - Texas has many flood-prone areas that require flood insurance, and some flood-prone areas are Austin, Houston, and Fort Worth. Individuals can determine whether their business locations or residences are flood zones by searching the address of the property in the FEMA Flood Map Service Center.

  • Hurricane - Cities located near the Gulf Coast are the most likely to experience hurricanes in Texas. Examples of vulnerable areas are Brownsville, Galveston, Houston, and Port Arthur. Typically, the hurricane season is between June and November, as well as August and September.

  • Earthquake - Earthquakes in Texas most times occur along the Gulf Coast and in northeast Texas occur near active petroleum fields or injection wells.

State residents can consult with knowledgeable Texas-licensed insurance agents to discuss the type of insurance needed to cover the natural disasters that are common in their areas. These agents guide their clients on what disaster insurance they need based on the common natural disasters in their cities or towns.