I’ve written before about the decrease in coverage of “standard” insurance policies in Texas, and the blind eye turned to this practice by the state agency charged with oversight. An update on this story has been reported in the Dallas Morning News. Here are excerpts:
A leading consumer group, trying to prove its argument that many Texas drivers and homeowners have “junk” insurance policies, filed an open records request seeking detailed information on all current policies sold in the state.
Texas Watch filed the unusual request with the Texas Department of Insurance, asking for all residential and automobile insurance policy forms and endorsements now in use. An endorsement is used by an insurer to add or subtract specific coverage in the original policy.
“Research conducted by the Texas Department of Insurance demonstrates that deregulation of policy forms in the state has led to significantly less coverage for most homeowners, who are being forced to pay good money for what are aptly described as ‘junk policies,’” said Alex Winslow, executive director of Texas Watch, referring to a department report from early 2011.
Winslow said the report indicates that when comparing current homeowner policies with the uniform, comprehensive policies used in Texas in the early 2000s, about 87 percent have less coverage for continuous leakage from plumbing or air conditioning.
Nearly 72 percent provide less coverage for backup of sewers and drains, and 67 percent give less coverage for damage to slabs and foundations. Some policies also offer less coverage today for damage caused by theft, freezing pipes, falling trees, mold and sudden discharge from AC systems.
“The bottom line is that consumers are hard-pressed to find a policy that offers the same level of protection they had 10 years ago” even though premiums have gone up, Winslow said.
Industry representatives disputed the criticism, saying that insurance consumers in Texas know upfront what their policies cover and don’t cover — and most are satisfied.
Mark Hanna of the Insurance Council of Texas said policies sold in Texas offer a variety of choices that have “all kinds of coverages, deductibles and rates” as well as a multitude of different companies to choose from.
The criticism of “junk” policies has gotten the interest of some lawmakers, including at a recent meeting of the Senate Business and Commerce Committee.
“Many consumers don’t know what they’re getting,” said Sen. Leticia Van de Putte, D-San Antonio. “All they know is they’re getting a raw deal.”
Texas Watch said one answer is to standardize policies using forms that provide comprehensive coverage for those who buy auto and homeowners insurance.