Texas Windstorm on small house?

Question

Do some investors go without Texas Windstorm Roof Insurance on a small, 1 story house (1100sq ft)?

Is this a sound strategy? It's almost $1000/yr with 2% deductible ($4k) with $200k value. A new roof is about $7-8K.

Travis Timmons · Answer

I'm of the same opinion on this (own rentals in Fort Bend and Central TX). Given the price of insurance, I'm on my own for roof replacements. The risk/reward just doesn't add up.

Todd Allen · Answer

Thanks Jason.  This is what I'm thinking as well. It's a risk with possible damage to the structure from trees falling,  but roofs are the main risk.

Jason Hirko · Answer

@Todd Allen I dropped my coverage after I had 3 houses flood in Hurricane Harvey and they denied my claims because Windstorm only covers water coming down, not up. They didn't care that the rising water was from a windstorm. Shame on me for not understanding my coverage, but I look at it like you do. I'll save the premium and know I have the money in case something happens, instead of paying the premium and hoping insurance comes through.

Bo Bond · Answer

Todd,

I can't speak as an investor, but can as an insurance agent.

Most agents will do what "you" feel is best in your interests while working to give you all the necessary details and options to make the best decision.  You should be looking for an agent who can help you do that.

If we're speaking of rentals in Houston, you'd certainly need to reach back and see what your wind exposure has been like over the past 10-20 years (if you can go back that far with good data) for this specific rental and area of the state.  There's always a risk, but I have to believe the further you get from the coast, the more sound this option might be for you.  The other thing to keep in mind is that windstorm coverage applies to wind damage to the entire building, and not just the roof in my experience.  Unless somethings changed, just keep that in mind.  If you remove this covered peril, you're removing wind damage coverage to the entire building, and not just the roof.

Your assessment of the deductible seems accurate, but I can't speak for the replacement cost of a new roof.  That would be one major concern for me if I were in your shoes looking to make this decision.  As you know, material, labor, and supplies for roofing can change a lot within a matter of weeks / months.  That said, if you've been a landlord for years and have niche relationships with contractors / roofers (or do the work yourself), then it would seem you're in the ideal position to make this decision.  There are plenty of investors who are in a financially strong position to self-insure their properties completely, take on much larger deductibles, or eliminate certain coverages from their policy in an effort to drive down their insurance costs.  Just weigh your options with an experienced agent, and choose what's best for you.

The only thing I might suggest before you pull the trigger on complete removal of windstorm coverage altogether, is to see if you can get quotes with 3% and 5% deductible options.  This may drive your premiums down enough to keep insurance in place just in case something unforeseen happens.  That way you at least have the coverage in place, just with a much higher deductible.  Based off your details, a 3% deductible would be $6k and a 5% deductible would be $10k.  Both of these options "should" drive your premiums down a good amount, and hopefully to a more acceptable level.  If not, then I don't see anything wrong with considering removing windstorm as long as you've weighed all the options.

Hope you find this helpful.

Jerry V. · Answer

Todd: With a roof that is only 2yrs old, HOPEfully you still have some warranty from the Roofing Company that installed it. (Ex: Even on small roofs we give warranties! (longer than 1yr!))

And for Wing/Hail coverage, also know that there has to be quit a bit of damage for them to cover(replace) the WHOLE roof... that means that small damage that usually would occur due to high winds, are not covered!  But that's okay, because small repairs should only be $150-400. IF you have a good/reasonable Roofer to call on (like us!). lol

PM with any specific questions.  w/J's Roofing - Richardson, TX

Todd Allen · Answer

Maybe you're not familiar with Texas Windstorm. Texas Windstorm is not for the whole house. It is only wind and hail coverage for the whole building - mostly roofs affected. Normal landlord insurance will not cover wind/hail  events in the the texas gulf coast counties. Mine are Harris and Galveston counties. I already have a $1500 policy for other perils and liability.

Daniel Tanasa · Answer

Hey Todd,

Is this the insurance you plan to take for the whole house or this will be additional to your regular insurance?

Todd Allen · Answer

Thank you for the detailed reply. I just had the roof replaced 2 years ago for $7k and is certified for Windstorm. It had no damage from Hurricane beryl. I didn't think about wind damage to the building.

I'll check into raising the deductible.

Best,

Todd

Texas Windstorm on small house?

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