Are Funds Available to Pay Texas Hurricane Insurance Claims?

As Hurricane Isaac makes landfall, it is a grim reminder to all on the Gulf Coast that hurricane season is well underway. This has led some in Texas to question whether sufficient funds are available to pay claims in the state stemming from hurricane damage.

Currently, due to cancellations by private insurers, the Texas Windstorm Insurance Agency (TWIA) supplies policies to a majority of property owners located along the Gulf Coast. To cover those policies, the state of Texas has $800 million in available funds.

What happens if a hurricane that hits Texas results in more than $800 million in claims? The legislature has authorized the TWIA to sell $1 billion in bonds. How would the bonds be repaid? Coastal property owners and vehicle owners would have to repay as much as 70 percent of the bonds through higher premiums. The insurance industry would contribute the remaining 30 percent.

The insurance industry would also cover an additional $500 million through public securities. Finally, there is also $850 million available through re-insurance. Re-insurance is insurance that is purchased by insurance companies to decrease their risk.

This comes to a total of about $3.2 billion in available funds to pay for claims on TWIA policies. That may seem like a lot, but in reality it may not be enough. Hurricane Ike resulted in more claims than any other Texas storm; these claims totaled $12 billion. This number is dwarfed, however, by the $108 billion in claims caused by Hurricane Katrina.

Home and business owners can have difficulty receiving the compensation they deserve under their insurance policies. An attorney can advocate on property owners behalves, helping ensure their claims are processed promptly, and they receive the compensation they are entitled to.

Source:, “Agency has money for windstorms,” Dan Wallach, August 27, 2012.

For more information on our practice please visit our Texas hurricane insurance claims page.