If you’re looking for renters insurance companies in Austin, you’ll find a wide variety of them available to you. In most other major cities across the country, you could assume that policies from different companies would offer a reasonably similar set of coverage. If you’re looking for Austin Renters Insurance, please don’t make that assumption!
Why do you need to shop more carefully for renters insurance companies in Austin? There are two significant concerns that you must be aware of in order to make sure you’re getting that policy you think you’re getting!
Market Conditions And Regulation Are Good For Renters Insurance Companies, But Consumers Need More Knowledge
Renters insurance companies in Austin enjoy two major advantages not readily found outside the state of Texas. The first is file-and-use, the second is the way policy forms are managed by the state. We’ll touch on both below. Neither is a bad thing per se, but they have the potential to open consumers to some amount of additional risk. By being aware of that additional risk, you can mitigate it and make sure you get the coverage you intend to purchase.
Renters Insurance Companies In Austin Can Write Their Own Policy Forms
Texas has taken what they refer to as a “reasonable, modern approach to regulation.” While there is spirited debate among consumers and consumer groups whether that approach benefits consumers, that’s a debate we’ll abstain from for the present time. We’re not here to argue the merits, only to make sure you have the information you need when you go shopping for a policy.
The Texas approach to regulation of renters insurance companies boils down to “less is more.” To that end, companies are allowed to write a policy form as they see fit, even when it varies substantially from the state approved policy form. What does that mean to you?
It means that Texas may be the one place in America where you absolutely cannot assume that renters insurance policies from two companies provide similar levels or types of coverage. In most states, the state sets out a policy form and insurance companies need to use a substantially similar form and add endorsements to it if they want to change the coverage. \
While it’s always suggested that you read the policy and the exclusions, when you’re shopping renters insurance companies in Austin it’s imperative that you do so!
Two Different Renters Insurance Companies May Cover Two Different Sets Of Risks
That’s right, you need to compare both price and coverage when you’re shopping for renters insurance in Texas. Here are two quick examples of why:
Wind Is Excluded. Actually, As Of Renewal, No It’s Not!
One underwriter we’re aware of has been doing business in Texas for several years. Previously, they offered windstorm and hail coverage in most of the state, but not in coastal areas. About a year ago, they changed their policy form so that it covered windstorm and hail statewide. This is valuable coverage in coastal risk areas, but adding the coverage to policies that did not previously offer it caused a significant jump in premiums for those policyholders.
That company could potentially have done a better job of communicating the change to existing policyholders. Most became aware of it when they got a renewal notice for two or three times what they had paid last year and began to panic. In reality, the increase was justified because coverage was offered that had not been previously part of the policy. But it caused some confusion among the company’s customers.
All Animal Liability Excluded
Another example that comes to mind is a company that excludes animal liability entirely from Texas policies. Renters insurance companies in Austin and statewide are able to add or remove many types of coverage from the policy. Often there is a form to sign acknowledging this, but depending on the coverage being added or removed there may not be.
You don’t run a farm, so why do you care about whether renters insurance companies cover animal liability?
It’s common to exclude certain breeds of dogs. But exclusion of animal liability means that all dogs, all cats, all pets of any kind are excluded from liability coverage. Your ferret bit someone? You’re out of luck. Your cat scratched someone and caused an infection that landed them in the hospital? You’re out of luck.
How Can You Protect Yourself?
That’s all well and good, as long as you’re aware of it. It’s vitally important that you read and understand all of the exclusions offered by various renters insurance companies in Austin before you purchase a policy, because they can significantly impact the availability of coverage!
These are just two examples of parts of Texas policies that might vary from what you expect. Make sure you are on the lookout for others, and always work with renters insurance companies that you know and trust, who are backed by trusted underwriters.
File And Use Rates
Another thing to be aware of that’s essentially unique to renters insurance companies in Texas is called “file and use” rates. Here again, it’s not necessarily a bad thing, but it’s a stark difference from how things work in most other states and it’s something you need to be aware of.
File and Use simply means this: Insurance companies can and may determine the rates they would like to charge for Austin Renters Insurance and file them with the state. Once they have done so, they may immediately begin to charge the new rates. They do not need to wait for approval of the rates, nor are they expected to.
In most states, the approval is part of the process of a new rate filing. Renters insurance companies in Austin and across Texas do not need to worry about that. The worst case scenario, of course, is that the state disapproves of the rate increase or part of it. In that case, the insurance company simply refunds the difference to policyholders who were charged the disapproved rates, and carries on under the approved rates.
Renters insurance companies in Austin have a great deal of leeway that simply isn’t present in most other states. The overwhelming majority of companies have proven themselves capable of using that leeway responsibly. There are a very small number of companies selling insurance in Texas who have chosen not to be rated by AM Best or a similar company. Any company choosing not to expose their financials to a ratings agency should be viewed with caution, at best, of course.
Shopping for a policy in Texas is easy, once you understand what coverage may or may not be available to you and how rates are set. You still know that if the filed rates are disapproved, you’ll get the difference back. The easiest way to get covered is to work with the insurance experts for Texas renters.
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