Insurance prices for Texas drivers rose by less than one percent in 2025, and homeowners rates rose by just 4.3% the same year, according to Texas Department of Insurance data. This stabilization demonstrates that sharp insurance increases from 2022 to 2024 were driven by unique external factors: 40-year high inflation across the economy, combined with an increase in legal system abuse and continued population growth in areas at high risk for extreme weather.
Still, Texans remain concerned about their home insurance premiums. State legislators can address this issue by incentivizing storm-resistant construction and reining in outrageous lawsuits that drive up costs and limit competition. These and other market-based reforms will invite greater competition from insurers and give consumers more choices.
Disaster Preparation
Insurance rates are a reflection of increasing risk, and Texas has plenty of that when it comes to extreme weather. The Lone Star State has been the national leader in big storms consistently over the last few decades, all while building more homes in high-risk areas than most states.Making homes more resilient to severe storms and other weather events can help control insurance costs. Several states have created programs and incentives to better protect homes from wind, hail and hurricanes. These investments make homes less vulnerable to costly damages, help preserve property value over time, and support the availability of insurance by reducing risk and improving loss outcomes. Every $1 invested in disaster preparation saves $13 in combined economic impact, according to a study from the U.S. Chamber of Commerce and Allstate.
For example, the Louisiana Fortify Homes Program (LFHP) provides state grants to help homeowners pay to strengthen their roofs against hurricanes. In North Carolina, the Strengthen Your Roof program provides grants to help coastal residents upgrade to stronger, storm-resistant roofs. And the Strengthen Alabama Homes provides roof-strengthening grants that are largely funded by the insurance industry.
For more information, download our one-page handout that explores the need for a resilience program in Texas.
Relief from Lawsuit Abuse
Texas has seen nuclear verdicts – awards of $10 million or more – go up in recent years. Texas has had 130 of them over the past decade, the fourth-highest number of nuclear verdicts. These penalties are often excessive and are being driven by shadowy investors who treat our legal system like a casino, financing lawsuits and hoping for a big return on their investment.
Texas families pay roughly $5,000 a year in higher costs that are due to tort lawsuits, according to the Perryman Group. The legislature last year considered a bill, SB 30/HB 4806, that the Wall Street Journal said would “stop lawyers from padding jury awards with inflated and unreasonable charges.” Those types of proposals remain a priority to reduce costs. In Florida, reforms to crack down on lawsuit abuse in 2022 and 2023 have yielded rate decreases in the past year by many companies for both auto and home. In addition, 17 new insurers have entered the state to do business. Georgia reforms that limit excessive damages and attorney fees and tighten liability rules have prompted insurers to reduce rates for auto coverage. These reforms are also expected to encourage reductions in home insurance rates.
Market-Based Reforms
It’s important for Texas to pursue reforms that allow the market to function absent from overregulation. Other states have proven that burdensome regulations force insurers to leave the state, leaving fewer options for consumers. California’s dysfunctional insurance market was the result of a years-long policy in which regulators artificially suppressed markets, driving insurers out of the state and reducing options for consumers.