Purchasing a Texas homeowners insurance policy is perhaps one of the most important types of insurance coverage that you can own in the state of Texas. The reason for this is that owning a home is perhaps the most important factor in what people call the “American Dream”. Before you actually go apply at your local insurance office it is important to understand the Texas homeowners insurance industry a little bit better.
The Cost of Texas Homeowners Insurance Coverage
You must know that in Texas it is not relatively cheap to insure your own house from disasters or accidents. In fact, a survey conducted in the year 2005 by Forbes Magazine indicated that the people in the state of Texas were the ones that paid the highest in premiums out of every single state in the nation. According to that survey the average premium for a normal house in the state of Texas was about $1,238 due to hail storms, hurricanes that went into the Gulf of Mexico and mold scares.
It is important to understand that natural disasters cannot be prevented; but there are other things that you as a homeowner are responsible for. Termites are an example of something that can be prevented if you really value your home. They can do tremendous damage if you are a homeowner, but they are easy to kill and it only requires a little bit of your money and time.
On the other hand, things such as hail storms as mentioned before, hurricanes, tornadoes and floods are far from human reach and would be impossible to stop regardless of the circumstances. This is where Texas home insurance comes into effect. Companies know the topography and geography of your land so it is easy for them to judge the risk of insuring someone living there.
Components of Texas Homeowners Insurance Coverage
In the state of Texas just like anywhere in the United States, basic home insurance policies need to have the four basic types of coverage. These four important services are the coverage for the structure of your home, coverage for your possessions inside the home, liability protection coverage, and additional living expenses coverage.
- Structure Coverage: This is perhaps the first thing people think of when they hear home insurance. The reason for this is because in America we think that the homeowner insurance only covers the four walls we live in and the ceiling/roof that is. Unfortunately there is much more to know about the structure of your home and the coverage given by the insurance company. A company will only pay a policy holder if the damage to the home was caused by fire, hail, hurricanes, tornadoes, lightning and any other things that are covered by your policy. Because of this it is very important to know what things are covered and which ones are not (this can change from company to company, so make sure you ask at the time of getting the quote). What the policy won’t cover would be things like earthquakes and maintenance needed due to the normal wear and tear of your property.
- Assets/Personal Belongings Coverage: This coverage can be very tricky if you don’t know how it works. Most insurance companies only offer asset coverage for about 50 to 70 percent of the amount of insurance you have in your home. An example of this would be that if you have $100,000 in homeowners insurance with the company, then the most likely range for the coverage of your valuables will be between $50,000 and $70,000. There is good news however for many people out there and that is that with many insurance companies your belongings will be covered off premises. This means that your valuables will be covered anywhere in the world! Some policies also cover accidental disappearance meaning that if you just lose an article while traveling you could also be entitled the money for it.
- Liability Coverage: This is included in policies just so people cannot sue you if they get injured in your premises. Well to explain it a little bit better let’s put a real life example. If you are just having a fun day in your ranch and someone comes over to visit you. Let’s say they get injured on your property and they want to take you to court in order for you to pay the medical expenses involved in the accident. Liability coverage will pay for court fees and other related costs to protect you from losing money. People in Texas need to know that this is one of the most important services provided by home insurance companies. The way this one works is that they can file the claim to the company itself and your home insurance company will just reimburse them directly instead of having to go to court.
- Additional Living Expense Cost: To make it easier to understand you will be paid some money to live in the case that you are not able to live in your household. You also have the option of increasing this type of coverage which then means your premiums will also be a little bit higher.
Texas Homeowner Insurance Policies Are Not Hard to Understand, But Can Be Very Expensive!
As you can see from the article and the explanations give above, the home insurance industry in the state of Texas is not hard to understand. Unfortunately for people residing in the “longhorn” state, because the area is so big; they are subject to many natural disasters. You could be hit by a hurricane, your house can be devastated by a hail storm or you can have mold in your home and end up paying a fortune for homeowners insurance. Whatever your luck is just know that there are many things that can drive the price down and taking care of your property should be the first priority!
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The Necessity Of Having Adequate Texas Home Insurance Coverage
In Texas, homeowners insurance coverage is an absolute must. The state is one of the hardest hit by severe weather, so homeowners need to protect themselves and their most important of investments – their home – by carrying good coverage.
Yet, as with many things, understanding what makes up good homeowners insurance coverage in Texas is not always obvious. Knowledge is the key to making sure you have what you need.
Take the time to learn a little about Texas homeowners insurance coverage to make sure you make the right choices to keep a roof over your head.
3 Types Of Texas Home Insurance Coverage
There are 3 types of standard homeowners policies in Texas, all of which have been mandated by a governmental regulatory body:
- HO-A: This type of policy covers for only certain kinds of losses and will replace your home and possessions on actual cash value basis only.
- HO-B: This policy covers most losses, unless they have been excluded, and will indemnify your loss based on replacement cost.
- HO-C: This is the most comprehensive of all coverage and as such the most costly type.
In the past few years the government has relaxed its control of the insurance industry to some degree. Companies can now tailor these policies somewhat using endorsements, exclusions and riders. Each company can differentiate itself somewhat in its offerings. However, the consumer needs to be wary of these changes.
Understanding Terms Used In Texas Homeowners Insurance Coverage
Endorsements – a form or addendum used to change an insurance policy and its coverage or conditions. They may be used to increase coverage or remove coverage that is typically covered in that type of policy.
Riders – same as endorsements
Exclusions – a clause added to an insurance policy, which removes coverage of certain types of events, losses or risks
It is important to understand these terms because they are what insurance companies use to tweak their policies and they may make you more vulnerable to loss. Endorsements, riders and exclusions are often how insurance companies will protect themselves from high-risk situations. For instance, if you live in a hurricane-prone area, your insurer may try to include an endorsement that says you are not covered for damage or loss caused by a hurricane. For most people these sorts of endorsements are not desirable.
What Texas Homeowners Insurance Coverage Protects And Doesn’t Protect
Texas homeowners insurance will typically cover:
- fire and smoke damage
- theft
- vandalism
- hurricane, wind and hail damage
- liability claims
- medical payments for someone hurt on your property
- explosions
- water damage that occurs without warning and by accident
- civil upheavals
There are many things typical TX homeowners coverage does not cover:
- damage from rodents
- losses arising from a vacant home, when it has been that way for more than 2 months
- maintenance and upkeep of your home
- flooding
- earthquakes
- frozen pipes, if your home is vacant and you took no precautions to prevent it
- damage to landscaping caused by wind and hail
- slowly developing water damage
Keep in mind that the above statements are general guidelines. You will need to look at your policy and each individual company to confirm these generalities.
Ensuring Your Texas Homeowners Insurance Coverage Is Sufficient
There are many other things you can do to ensure that your coverage is sufficient. Start by doing an inventory of your personal possessions and how much it would cost to replace them. Many policies automatically come with a standard forty percent of the value of your home added to the policy to cover the cost of its contents. This may not be sufficient for everyone.
Value your belongings to make sure that you have sufficient coverage to replace everything should you suffer a complete loss. Check to see what your company’s policies are regarding art, jewelry, etc. You may need additional coverage for these and other items.
Review your policy regularly, at least on a yearly basis, to make sure you have enough coverage to completely rebuild your home should you lose it. Sometimes the formula that insurance companies use to automatically raise the amount of coverage on your home is insufficient. Sometimes new home construction costs rise faster than anticipated and you do not want to be underinsured.
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