Texas Homeowners Insurance – Texas Hazard Insurance

Texas Home Insurance

State of Texas – Insurance

Texas is the largest State in the lower 48 contiguous States and the second largest State in the Union when including Alaska.  Texas has the largest population of all States in the U.S., spread amongst many large towns including:  Houston, San Antonio, Dallas, Austin, Fort Worth, and El Paso;  each of the aforementioned have a population between 650,000 and 2,500,000 residents.  Texas is an important State to concentrate on for insurance carriers; however, this does not come without risk – the Southern Counties are affected by adverse weather and floods posing great challenges for insurers. 

Texas Homeowners Insurance

Homeowners Insurance, also known as Hazard Insurance, pays to repair or replace your dwelling and personal property if they’re damaged or destroyed by a covered loss as defined in your policy.

An insurance policy is a contractual agreement between an insurance carrier and the named insured. It is important to review it carefully and understand the coverage and limits. In Texas, it is required by law for an insurance carrier to send the Bill of Rights to the customer (insured).

Texas Homeowners Policies

Homeowners policies in Texas commonly include the following coverage:

  • Dwelling pays if      your house is damaged or destroyed by a covered loss.
  • Personal      property pays if      the items in your house are damaged, stolen, or destroyed.
  • Other      structures pays to repair or rebuild structures not attached      to your house, such as detached garages, storage sheds, and fences.
  • Loss of      use pays your      additional living expenses (housing, food, and other essential expenses)      if you must temporarily move because of damage to your house from a      covered loss.
  • Personal      liability pays to defend you in court against lawsuits and      provides coverage if you are found legally responsible for someone else’s      injury or property damage.
  • Medical      payments pays the      medical bills of people hurt on your property up to the limit listed on      the policy.

Note about replacement cost and actual cash value:

  • Replacement      cost is what      you would pay to rebuild or repair your home, based on current      construction costs. Replacement cost is different from market value and      doesn’t include the value of your land.
  • Actual      cash value is what you would pay to rebuild or replace your      property minus depreciation. Depreciation is a decrease in value due to      wear and tear or age.

Policy Coverage

Companies may exclude coverage for certain losses. Even the most comprehensive all-risk policy will exclude certain types of damage.

The following chart shows the most common types of losses covered or excluded from a homeowners policy:

Most Policies Cover Losses Caused by

Most Policies Do Not Cover Losses Caused by

Fire and   lightning Flooding
Sudden and   accidental damage by smoke Earthquakes
Explosion Termites,   insects, rats, or mice
Theft Freezing   pipes while your house is unoccupied (unless you turned off the water or   heated the building)
Vandalism   and malicious mischief Losses if   your house is vacant for the number of days specified by your policy
Riot and   civil commotion Wear and   tear or maintenance
Aircraft   and vehicles Wind or   hail damage to trees and shrubs
Windstorm,   hurricane, and hail (this coverage may be excluded if you live on the Gulf   Coast) Mold,   except what is necessary to repair or replace property damage caused by a   covered water loss
Sudden and   accidental water damage Water   damage resulting from continuous and repeated seepage

Policy Dollar Limits

A policy’s dollar limits are the maximum amounts your insurance company is obligated to pay in the event of a covered loss. The Declarations Page is the summary page attached to the policy and shows the policy’s dollar limits.

To receive full payment (minus your deductible) for a partial loss (such as a hail-damaged roof) most companies require you to insure your house for at least 80 percent of its replacement cost. If you insure your house for less than 80 percent of the full replacement cost, the insurance company will only pay a portion of the loss; this is known as the coinsurance clause. Most preferred carriers require you to insure your house for 100 percent of its replacement cost.

Coverage for Your Personal Property

Homeowners policies provide coverage for your personal property (such as furniture, clothing, and household electronics).

Homeowners policies usually cap the coverage amounts for certain types of personal property, such as jewelry, silverware, furs and art. You may be able to buy additional coverage for these items for an extra premium.


Inventory Your Property

Many people learn after a fire or burglary that they aren’t able to remember exactly what is missing without either a detailed inventory or photos of each room in the home prior to the loss.  A written inventory will help one decide how much insurance would be required in the event of a total fire loss.

It would be a great idea for each insured homeowner to digitally photograph or videotape each room, including closets, open drawers, storage buildings, and garage; these digital files can be stored on a cloud based network or simply on a disk with copies in more than one location. A written inventory and receipts for major items should be stored in a fireproof safe or an alternate location.

Other Types of Residential Property Policies

  • Renters      insurance. A landlord’s insurance policy doesn’t cover a      renter’s personal property. Renters insurance covers your belongings,      provides liability protection, and pays additional living expenses if a      fire or other event stated in your policy forces you to move temporarily.
  • Condominium      insurance. Condominium insurance covers your belongings,      provides liability protection, and pays additional living expenses. It      also covers damage to improvements, additions, and alterations to the      condo.
  • Townhouse      insurance. Townhouses may be insured by either an individual      homeowners policy or an association master policy. If a townhouse is      owner-occupied and the townhouse association doesn’t have a master policy      on the building, you can purchase a homeowners policy on your individual      unit.

Other Types of Insurance You Might Need

Windstorm and Hail Insurance

Most homeowners policies don’t cover windstorm and hail damage if you live in any of the 14 coastal counties or parts of Harris County on Galveston Bay. The Texas Windstorm Insurance Association (TWIA) is the state’s insurer of last resort for windstorm and hail coverage. Once a hurricane has entered the Gulf of Mexico (80 degrees longitude and 20 degrees latitude), you may no longer change or buy windstorm coverage.

For more information about windstorm coverage, contact TWIA at 1-800-788-8247 or online at www.twia.org.

Flood Insurance

Homeowners policies don’t cover flood damage. To protect yourself from losses caused by most flooding, you may buy a separate flood insurance policy from the National Flood Insurance Program (NFIP). The Federal Emergency Management Agency (FEMA) runs NFIP. If your property is in a special flood hazard area, your lender will require you to have flood insurance. A special flood hazard area has a 1 percent chance of being flooded in any given year.

TWIA flood insurance requirement. Some Gulf Coast residents must buy flood insurance to be eligible for a TWIA policy. The requirement applies to you if

  • you      constructed, altered, remodeled, or enlarged your property (to the extent      that a certificate of compliance is required) on or after September 1,      2009
  • any part      of your property is in flood zones V, VE, or V1-V30 as defined by NFIP
  • flood      coverage is available from NFIP.

Property repairs are excluded from the requirement. Repair is defined as the reconstruction or restoration of a structure that is damaged or deteriorated.

To view flood maps, visit FEMA’s website at www.floodsmart.gov/floodsmart/.

Extra Coverage (Endorsements)

If you want more coverage than the policy offers, you might be able to add an endorsement to your policy for an extra premium.

The following are common endorsements you can consider adding to your policy:

  • Backup of      sewers or drains. Pays for damage caused by sewer or drain backup.
  • Extended      or additional dwelling replacement coverage. Pays up to a certain amount if      your policy doesn’t pay enough to rebuild your home.
  • Law or      ordinance coverage. Pays if repair costs are higher because of local      building codes or ordinances.
  • Replacement      cost-dwelling. Pays replacement cost after you repair or replace      your property.
  • Replacement      cost-personal property. Pays replacement cost after you repair or replace      your property.

Personal Umbrella Liability Insurance

If you have assets to protect and require more personal liability coverage than a homeowners policy provides, you can buy a separate umbrella policy. The Personal Umbrella Policy provides a secondary layer of coverage picking up where your underlying Homeowners and Automobile limits are exhausted.  The Personal Umbrella Insurance will require a minimum underlying limit of liability on both the Homeowners and Automobile policy.

Review your Policy

After you buy a policy, review it to ensure that everything is correct. Review the following items listed on the declarations page:

  • Your name      and the property location.
  • Policy      period. This is      the date the policy is in effect. Your mortgage company or lienholder will      use this date to ensure that you have insurance on your property.
  • Coverage. This      section lists your property and liability coverage and limits. Consider      whether your property coverage limits are high enough to replace your      house and personal property if they are damaged or destroyed. You can      increase property and liability coverages if you don’t think they’re high      enough.
  • Deductible. The      deductible is listed as a dollar amount and a percentage for each type of      coverage. The deductible is the amount that will be deducted from your      payout in the event of a covered claim.
  • Policy      premium. This is the      cost of your policy after your endorsements and discounts.
  • Mortgagee. Make sure      the name, address and loan number of your mortgagee are correct. The      listed address will be where the insurance carrier will mail the      ‘Mortgagee Copy’ of your insurance policy; if this is incorrect, you will      most likely receive a letter from your mortgage company.

Understanding Rates and Premium

Factors that Affect Your Premium

Companies use a process called underwriting to decide whether to offer a policy and what rate to charge. Each company must file its underwriting guidelines with Texas Department of Insurance and send updates if the guidelines change. Companies use various factors to determine premium. These include:

  • Home’s age      and condition. Preferred companies will refuse to insure homes in      poor condition, but they may not deny coverage solely because of a home’s      age or value. Companies will charge more if insuring an older house. If one      has a replacement cost policy, the policy will pay to rebuild the insured      home if it’s destroyed by a covered peril. Premiums will increase in      relation to the amount of replacement or reconstruction cost.
  • Construction      materials used in home. Homes built primarily of brick are less expensive      to insure than frame homes since brick homes are less likely to burn.
  • Where you      live. Premium      will likely be higher in areas with a higher crime or high storm activity;      premium is always assessed in relation to risk.
  • Availability      of local fire protection. Premium are usually lower for homes in areas with      access to good fire protection. Protection classes are assessed to areas      based on distance from closest fire station and distance between fire      hydrants.
  • Your      claims history. Companies use claims history to determine what to      charge for your coverage. Your claims history includes both the type and      the number of claims filed. Claims activity may also disqualify one from      insuring with a ‘preferred carrier’ most often offering the lowest      premium.
  • Your      credit score. In Texas, companies may consider your credit score      when deciding whether to insure a home and the premium to assess. However,      a carrier may not refuse to insure, cancel or nonrenew a policy solely      because of credit score. Companies that use credit scoring must file their      credit scoring models with the Texas Department of Insurance. It would be      prudent to review your credit report each year and correct any errors as      carriers are permitted to grade risk utilizing personal finances as a      factor.


Discounts can reduce insurance premium. All companies offer some type of premium discounts when reducing risk. Each company sets the amount of the discounts it offers. A discount may be offered for having:

  • an      impact-resistant or noncombustible roof
  • burglar,      fire, and smoke alarms
  • an      automatic sprinkler system
  • fire      extinguishers
  • other      policies with same company or group
  • no claims      for three years in a row.

Some discounts may be automatically offered based on the criteria obtained to get a home insurance quote, whilst others may require proof or certification.  Some carriers offer discounts for marital status, age & accredited builder discounts on newer homes.


Many companies use the Comprehensive Loss Underwriting Exchange (CLUE) to review your claims history. CLUE reports list the property insurance claims history of people and houses – regardless of who owned them – for the last seven years.

Companies are only allowed to report information if someone filed a claim. Federal law gives you the right to challenge wrong information. If an insurance company based part of its decision to deny you coverage on a CLUE report, you can get a free copy of the report by calling LexisNexis Personal Reports at 1-866-527-2600 or by visiting its website at https://personalreports.lexisnexis.com/index.jsp

Before calling, get the CLUE reference number from the company’s denial letter or from the company. Using the reference number will speed the process by making sure you are requesting the right report. CLUE is a registered trademark of Equifax

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