Should Texas Buy Insurance To Protect Billions Of Dollars Worth Of State Property?

Hurricane Harvey inflicted substantial damage to state property, but some say the state is “self-insured.”

By Rhonda FanningJanuary 19, 2018 1:28 pm

The Austin American-Statesman reports that the state of Texas has billions of dollars of uninsured property. When catastrophe strikes – like, say, a hurricane – who pays for the damage? Eric Dexheimer, an investigative reporter for the Austin American-Statesman, has been doing the numbers.

He says the Texas Department of Criminal Justice sustained an estimated $1 million in damage from Hurricane Harvey. Most of the destruction was at the W.F. Ramsey prison facility, where 4,500 inmates had to be evacuated.

“The Texas Department of Criminal Justice is one of actually an unknown number of state agencies that don’t cover any insurance,” Dexheimer says.

He says the question of uninsured state property also came up when the Governor’s Mansion was badly damaged in a 2008 fire.

That building wasn’t insured, either. “The preservation agency had to petition the legislature for more than $20 million to conduct repairs and do some renovations,” Dexheimer says.

He says that the State Office of Risk Management, which is charged with mitigating risk to save property, only recently estimated how much state property isn’t covered.

“It was only in 2015 that the legislature asked them to conduct a survey to find out how much state property was uninsured,” he says. “What they found out was that it was about $7.4 billion worth, although even they concede that is an educated guess.”

Dexheimer says other states typically set aside funding for insurance. But in Texas, the system is best described as “self insurance” because agencies can simply ask the legislature for funding.

“Bill Gates probably doesn’t need insurance on his house. If it burns down, he just builds a new one,” he says. “But most people I spoke to agree that over the long run, the cost of purchasing a premium and setting aside money for insurance is cheaper than paying out of pocket for repairs as they occur.”

Written by Jen Rice.

Fire damage at the Texas Governor’s Mansion in 2008. Credit: KUT News.