More than 18,000 second-home windstorm insurance policies in Galveston County could lose coverage under a proposal headed to the Texas Legislature.

The Texas Windstorm Insurance Association's (TWIA) Legislative and External Affairs Committee meets Tuesday, Sept. 1, at 1:30 p.m. to discuss recommending that lawmakers limit TWIA residential coverage to owner-occupied homesteads. The change, proposed by TWIA board member John Todd, would strip eligibility from vacation homes, investment properties and rental units across the coast.

Galveston County holds the largest concentration of secondary-home TWIA policies in the state, according to committee materials. League City sits in that county, and residents who own or rent coastal second properties could be directly affected.

Statewide, about 20% of TWIA's roughly 280,000 residential policies as of March covered secondary homes, representing approximately $19 billion in insured exposure. Nearly 60% of those policies are concentrated in Galveston and Nueces counties, the Galveston Daily News reported.

TWIA is the insurer of last resort for wind and hail damage in designated coastal areas where private carriers won't write policies. Losing that backstop could leave thousands of property owners without any windstorm coverage option.

The association estimates dropping secondary-home policies would cut its probable maximum loss by 21%, from roughly $4.3 billion to $3.4 billion. Staff also estimated the change would trim reinsurance costs by about $60 million, a savings of roughly 30%.

Todd proposed the change at a June 22 board meeting, arguing it would make coverage more affordable for primary homeowners by reducing TWIA's largest expense: reinsurance.

The proposal would also affect renter-occupied properties, including short-term rentals and garage apartments, the Galveston Daily News reported. Galveston alone has an estimated 4,500 active short-term rental properties that generated $12.4 million in local hotel occupancy taxes in 2024.

Terrilyn Tarlton Shannon, who represents Galveston on the TWIA board, raised concerns about the broader reach. "I know it sounds like a simple remedy, but there's more of a consequence to that with the secondary properties also including tenant occupied properties," Shannon told the Galveston Daily News ahead of the Sept. 1 meeting. "What if they can't get insurance anywhere else?"

State Rep. Terri Leo-Wilson, who represents Galveston-area communities and was appointed by House Speaker Dustin Burrows to a committee overseeing windstorm insurance rates, told the Galveston Daily News the proposal could have "devastating consequences for coastal communities."

The committee cannot change coverage on its own. Any recommendation would go to the full TWIA board, which next meets Oct. 8. The board would then have to approve it before including it in TWIA's report to the Legislature as a proposed law change. If lawmakers pass it, the earliest effective date would be Sept. 1, 2027, according to association staff.

TWIA received four written public comments ahead of Tuesday's meeting: three opposed the proposal and one supported it. Property owners can submit comments to [email protected] before the meeting. The session will be held virtually and at 4801 Southwest Parkway, Building 1, Suite 200, in Austin.