Next big storm could bring other surprises

If a major storm comes through the area homeowners might get hit with more than property damage.

As a result of new Texas Windstorm Insurance Association rules that went into effect this year policy holders could also get hit with a surcharge to help pay for the damage.

And, if replacements or repairs to the structure were not certified, policy holders could be dropped from having their policies renewed.

“Ike cost the entire insurance industry $12 billion,” said Mark Hanna, Insurance Council of Texas Manager/Public Relations. “TWIA has $400 million right now to pay for the next storm. The next million dollar class (which would cover the estimated damage from a 20-year storm) would be covered by bonds, with 70 percent paid by consumers and 30 percent by insurance companies.”

Over $1.4 billion would be covered by Class 3 bond, $500 million of which would be paid by insurance companies. The funds needed to cover a 50-year storm ($1.9 billion to $3.25 billion) would be covered by re-insurance.

The surcharges would be required should Class 2 bonds be issued. Under the rules 70 percent of the costs would be paid by consumers through the surcharges that would be tacked on to policy holders in the Texas coastal counties.

“The 70 percent would be paid by surcharges on auto, home and commercial property,” Hanna said. “We don’t know how much, but it will be a small percentage tacked on to every auto policy, homeowner policy, commercial policy, and it will take effect for ever how many years in order to pay back this bond. I don’t think many people are aware of that.”

No one is willing to give a ballpark figure on what that surcharge would be to the 260,000 or so policy holders in those counties.

“That’s a great question and I’ve asked it many times, we just don’t know,” Hanna said.

Again, the surcharge would only kick in in the event of major storm damage after the initial pool is exhausted. There’s also the chance lawmakers could come back next year and change the rules again. But if you do have damage be sure and get any repairs or replacements certified during the repair process, do not wait until repairs are completed.

”What really (angers) a lot of people is they don’t have the inspection and the repairs have already taken place you can’t just get an inspector out there and say ‘hey it looks good.’ Then you’ll got to get an engineer to come out and tear into the roof and underneath the roof and look at the joints and everything else and see it is done right and it’s much more expensive.”

Make sure your contractor is aware you need the work certified by a Texas Department of Insurance inspector. The inspection is free. Tell him you need the certificate.

“If they don’t have that it could affect the policy being renewed or being purchased because if they found in the course of underwriting there has been some repairs done and they don’t have the (TDI inspection) certificate it doesn’t quality for TWIA,” TWIA Ombudsman Manuel Villarreal said. “We have this issue particularly with realtors of not knowing were repairs done and then a house is sold and then it’s not renewed by TWIA because the repairs weren’t certified.

“You have to have it certified. It’s free, and we have inspectors to meet with the contractors to make sure the component they are installing is what required here or the 14 counties.”

This isn’t just concerned with repairs after a storm. Improvements or repairs to anything structural could jeopardize future TWIA coverage if not certified.

So if you replaced that air conditioning unit and didn’t have it certified, be aware your TWIA coverage could be impacted.

“Even AC units have to be inspected, that’s part of the structure,” Villarreal said. “If you don’t have your air conditioner inspected it could cause that policy to not be renewed. A lot of folks don’t know about this.”