Quick answer: The Texas homeowners insurance market is changing fast in 2026. Average premiums have climbed from $1,987 in 2020 to $3,489 in 2025, several insurers have gone insolvent, and Texas regulators are tightening rules on how insurers treat older roofs. To fight rising costs, more homeowners are choosing an HO-2 policy, which pays roof claims on a 3.33%-per-year schedule and can cost up to 50% less than a traditional HO-3. At Somra Insurance Agency, 52% of our homeowners now choose HO-2, and one Spring, TX client saved $3,400 a year on a $300,000 home.
Key Takeaways
- Texas homeowners premiums rose about 75% between 2020 and 2025 (Texas Department of Insurance).
- Several carriers have left Texas or gone bankrupt after losses they could not absorb.
- Our flagship carrier has operated successfully in Texas for 20 years and specializes in homes 10 years old or newer.
- The carrier’s new HO-2 product pays roofs on a 3.33%-per-year depreciation schedule and costs up to 50% less than HO-3.
- HO-3 and HO-B use broad form covered perils and pay full roof replacement cost, at about double the HO-2 premium.
- 52% of our homeowners clients choose HO-2 and put their savings into a high-yield savings account as a roof replacement fund.
What Are the Major Changes Coming to the Texas Homeowners Insurance Market?
1. Premiums have nearly doubled since 2020
According to the Texas Department of Insurance (TDI), the average Texas homeowners premium was $1,987 in 2020 and reached $3,489 in 2025. Hail, wind, hurricanes and winter freezes have caused billions in insured losses each year, while roofing materials, labor and home values have all gone up. Hail alone accounted for nearly $5 billion in paid homeowners losses in both 2023 and 2024.
2. Rate increases are finally slowing
After average rate increases of 21.1% in 2023 and 18.7% in 2024, TDI data shows the average rate change fell to 4.3% in 2025, and recent filings in 2026 have trended downward. That is good news, but premiums remain far above where they were five years ago, so homeowners are still looking for ways to save.
3. Carrier failures have exposed weak insurers
Several smaller insurers have failed in Texas after taking on more storm risk than they could handle. When that happens, policyholders are left scrambling for new coverage, and claims shift to the state guaranty association. Choosing a financially stable, experienced carrier matters more now than ever.
4. New protections on roof age
On September 29, 2026, TDI announced a rule clarifying that insurers cannot deny or non-renew a home policy simply because the roof or other components are old. Insurers can still look at a roof’s actual condition. This change pushes the market toward products that price roof risk fairly, like roof payment schedules, rather than turning homeowners away.
5. Lower-cost policy options are growing
To keep coverage affordable, carriers are introducing products that share part of the roof risk with the homeowner. The most popular is the HO-2 with a roof replacement cost schedule, which we explain below.
Why Our Flagship Carrier Stands Out: 20 Years in Texas
While other carriers went bankrupt with losses they could not handle, our flagship carrier has operated successfully in the Texas market for 20 years. Its focus on homes 10 years old or newer (with newer roofs, wiring, plumbing and building codes) keeps losses predictable and pricing competitive. That discipline is why it can offer a new HO-2 product at rates that are, in some cases, half the cost of a traditional HO-3.
HO-2 vs. HO-3 vs. HO-B in Texas: Which Is Right for You?
| Feature | HO-2 | HO-3 | HO-B |
|---|---|---|---|
| Peril coverage | Named perils | Broad form covered perils | Broad form covered perils |
| Roof claim payment | Replacement cost schedule, 3.33% depreciation per year | Full replacement cost | Full replacement cost |
| Relative premium | Lowest (up to 50% less) | About double HO-2 | About double HO-2 |
| Best for | Budget-conscious owners willing to self-insure part of the roof | Owners who want maximum roof protection | Owners who want maximum roof protection |
HO-2: Named perils with a roof payment schedule
The HO-2 covers the specific perils listed in the policy, including the major Texas risks like fire, wind, hail and lightning. Roof claims are paid on a replacement cost schedule that depreciates 3.33% per year. That means the policy pays less on roof claims as the roof ages, but the premium can be up to 50% lower than a traditional HO-3.
HO-3 and HO-B: Broad form covered perils
As a property-focused agency, we also offer robust HO-3 and HO-B policies. Both use broad form covered perils and pay full replacement cost on the roof, so they offer the most protection. The trade-off is price: they can cost about double what an HO-2 costs.
How Does a 3.33% Roof Payment Schedule Work?
A roof payment schedule pays a set percentage of your roof’s replacement cost based on its age. With 3.33% depreciation per year:
- 5-year-old roof: about 83% of replacement cost
- 10-year-old roof: about 67% of replacement cost
- 15-year-old roof: about 50% of replacement cost
Because our carrier specializes in homes 10 years old or newer, most insured roofs are still paid at roughly two-thirds or more of replacement cost.
Real Example: $3,400 a Year Saved in Spring, TX
One of our recent clients in Spring, Texas owns a home valued at $300,000. After reviewing their roof age and coverage needs, we moved them from a traditional HO-3 to our carrier’s HO-2. The result was $3,400 in annual premium savings while keeping coverage for the major perils Texas homes face.
Why 52% of Our Homeowners Choose HO-2 and Self-Insure Their Roof
Today, 52% of our homeowners clients choose the HO-2. Many take the premium they save and deposit it into a high-yield savings account as a dedicated roof replacement fund. In effect, they self-insure the portion of the roof the schedule does not cover, while earning interest instead of paying it out in premium.
For example, a homeowner saving $3,400 a year would set aside $34,000 over 10 years before interest, often more than enough to cover the difference on a roof claim or pay for a full roof replacement. Every situation is different, so talk with your agent and financial professional about what makes sense for you.
What Happens If Your Insurance Company Goes Bankrupt in Texas?
If a Texas insurer is declared insolvent, the Texas Property and Casualty Insurance Guaranty Association (TPCIGA) steps in:
- Covered claims are paid up to $300,000 or your policy limits, whichever is less.
- Unearned premium refunds are covered up to $25,000.
- All policies are cancelled, and TPCIGA only covers claims arising within roughly the first 30 days after the insurer becomes impaired.
- You must buy a new policy as soon as possible to avoid a gap in coverage.
This is exactly why carrier stability matters. A 20-year track record in Texas is one of the best protections you can have.
Frequently Asked Questions
What are the biggest changes in the Texas homeowners insurance market in 2026?
Premiums have nearly doubled since 2020, several smaller insurers have failed, the Texas Department of Insurance has moved to stop insurers from denying or non-renewing homes based on roof age alone, and new lower-cost products like HO-2 policies with roof payment schedules are growing fast.
Why is homeowners insurance so expensive in Texas?
Severe hail, wind and hurricane losses, higher repair costs and higher home values pushed the average Texas homeowners premium from $1,987 in 2020 to $3,489 in 2025, according to the Texas Department of Insurance.
What is the difference between HO-2 and HO-3 in Texas?
HO-2 is a named perils policy that pays roof claims on a replacement cost schedule that depreciates 3.33% per year, and it can cost up to 50% less. HO-3 and HO-B are broad form covered perils policies that pay full roof replacement cost but can cost about double the HO-2 premium.
What is a roof payment schedule?
A table that pays a set percentage of your roof’s replacement cost based on its age. With 3.33% depreciation per year, a 10-year-old roof is paid at about 67% of replacement cost.
How much can I save with an HO-2 policy in Texas?
In some cases up to 50%. One of our recent clients in Spring, TX with a $300,000 home saved $3,400 a year by switching from HO-3 to HO-2.
What happens if my insurance company goes bankrupt in Texas?
The Texas Property and Casualty Insurance Guaranty Association pays covered claims up to $300,000 or your policy limits, whichever is less. Policies are cancelled and claims are only covered for a short period, so you must buy a new policy as soon as possible.
Can a Texas insurer deny my home because the roof is old?
Under a rule the Texas Department of Insurance announced on September 29, 2026, insurers cannot deny or non-renew a policy simply because the roof or other parts of the home are old. They can still consider the roof’s physical condition.
Get a Free Texas Homeowners Insurance Quote (No Credit Check)
Somra Insurance Agency specializes in Texas property and home coverage. We will compare HO-2, HO-3 and HO-B options side by side and show you exactly how much you could save. Getting started is easy, and a basic quote requires no credit check:
- Text HOME to 281-766-0619
- Get a quote online on our self-quoting platform for a basic quote with no credit check