Homeowners insurance guide

October 17, 2022

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Homeowners insurance protects you financially if your home or property is damaged or destroyed by something your policy covers, like a fire or storm.

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texas has a consumer bill of rights for homeowners and renters insurance. Your insurance company will give you a copy of the bill of rights when you get or renew a policy.

Is home insurance required?

The law does not require you to have homeowners insurance. But if you still owe money on your home, your lender will require you to keep it. Although not required by law, homeowners insurance is a good idea because it helps protect your home and other assets.

learn more: 10 steps to finding the right home insurance | 3 questions to ask before buying home insurance

types of coverage for homeowners

Homeowners policies combine several types of coverage into one policy. Most Texas homeowners policies include these six coverages:

dwelling coverage pays if your home is damaged or destroyed by something your policy covers.
personal property coverage pays if your furniture, clothing, and other things you own are stolen, damaged, or destroyed.
Other structures coverage pays to repair structures on your property that are not attached to your House. this includes detached garages, storage sheds, and fences.
loss of use coverage pays your additional living expenses if you have to move while your home is being repaired to repair damage to your policy covers additional living expenses including rent, food, and other costs you wouldn’t have if you were still at home.
personal liability coverage pays for medical bills, lost wages, and other costs for people you are legally responsible for injuring. it also pays if you are responsible for damaging someone else’s property. also pays court costs if you are sued because of an accident.
medical payments coverage pays medical bills for people injured on your property. It also pays for some injuries that happen outside your home, like if your dog bites someone in the park.

more information: do you have enough home insurance? | watch: securing the treasures of life

what risks does a homeowners policy cover?

Your homeowners policy protects you against different risks or perils. Hazards and hazards are things that could damage your home or property. This table shows the common risks that most policies do and do not cover. coverage varies by company. read your policy or talk to your agent to be sure of your exact coverages.

fire and lightning

floods

sudden and accidental release of water or smoke

a continuous leak of water; policies will also not cover mold removal, except to repair damage caused by a covered peril

explosion

termites, insects, rats or mice

theft

losses that occur if your home is unoccupied for the number of days specified in your policy

vandalism, malicious damage, riot and civil commotion

wear

planes and vehicles

earthquakes or earth movements

windstorm, hurricane and hail (but not if you live on the gulf coast)

wind or hail to trees and bushes

more information: home policies: all risk or named peril

look: does my insurance policy cover that? | What are the risks covered?

replacement cost coverage versus actual cash value

Homeowners policies provide replacement cost coverage or actual cash value coverage. To be fully protected, make sure your policy has replacement cost coverage.

replacement cost coverage pays to repair or replace your home and personal property at current prices. For example, let’s say you bought a new roof 10 years ago and the current price of a new roof is $10,000. If you have to replace your entire roof after a storm, a replacement cost policy would pay for a new roof at the current price. if you have a $2,000 deductible, your company would pay $8,000.
Actual cash value coverage pays replacement cost less depreciation. depreciation is a decrease in value due to wear and tear and age. In the same 10-year ceiling example, the actual cash value could be $7,000. after your $2,000 deductible, your company would pay $5,000. you would have to pay the rest of the cost of the new roof yourself. this means total out-of-pocket expenses for an actual cash value policy would be $5,000, compared to $2,000 for a replacement cost policy.

More Information: Homeowners Policies: Replacement Cost or Actual Cash Value?

deductibles and dollar limits

if you have a claim, you must meet a deductible.

A deductible is the amount of a claim that you must pay yourself. For example, if you have a $1,000 claim and your policy has a $300 deductible, the insurance company will deduct $300 from your claim amount and pay you $700. you may have different deductibles for each type of coverage.

more information: what to know about deductibles

policies pay only up to the dollar limit.

each type of coverage has a dollar limit. make sure you have enough coverage to replace your home and property if you have a total loss. if you don’t have enough coverage, you’ll have to pay the difference yourself. most companies require you to insure your home for at least 80% of its replacement cost. some companies require you to insure your home for 100% of the replacement cost.

The first page of your policy is the declarations page. It has a summary of your policy, including your coverages, dollar limits, and deductibles.

personal property coverage

Homeowners policies generally pay a percentage of your dwelling coverage limit to repair or replace your furniture, clothing, and other property. For example, let’s say you insure your home for $100,000 and your policy covers your property at 20% of that. your personal property would be insured for up to $20,000.

Homeowners policies limit what they will pay for things like jewelry and art. If you own jewelry, art, or other expensive items, talk to your agent about adding more coverage.

Make a list of the items you own.

A complete list of your property will help you decide how much coverage you need and make it easier to file claims.

update your list periodically. If you can, please include the date you purchased each item, its value, and its serial number. this is especially important for expensive items. Photograph or video every room, including closets, storage buildings, and your garage. open drawers and photograph what’s inside. keep the list and receipts of important items in a fireproof safe or other place. use our home inventory checklist to help make your list.

more information: you need a home inventory

other coverages you may need

Your homeowners policy may not protect you against some risks. You can purchase a separate policy or add it to your policy if you need more protection.

flood insurance

Homeowners policies do not cover damage from flooding. If your home is in a designated flood zone, your lender requires that you have flood insurance. but floods can happen anywhere. More than half of the homes flooded by Hurricane Harvey were outside designated flood zones.

Talk to your homeowners insurance agent about obtaining a flood policy from your insurance company or the National Flood Insurance Program. If your agent doesn’t sell flood insurance, call 800-427-4661 for help. Most flood policies have a 30-day waiting period before they go into effect, so don’t wait for a storm to decide to buy coverage.

more information: do you need flood insurance?

gulf coast windstorm and hail insurance

if you live on the texas coast or in harris county on galveston bay, your homeowners policy does not cover wind and hail damage. the texas windstorm insurance association (twia) sells wind and hail coverage for coastal residents. you purchase twia coverage from local insurance agents. Depending on where you live, you may need flood insurance before Twia will sell you a policy. You may also need a home inspection by an engineer or windstorm inspector. For more information, visit twia.org or call 800-788-8247.

Don’t wait until the last minute to purchase wind and hail insurance. twia will not sell you a policy if there is a hurricane in the gulf of mexico.

more information: housing, flood, wind: what policies do you need? | watch: windstorm insurance inspections

additional liability coverage

Homeowners policies provide liability protection, but the amount of coverage is limited. If you want more coverage than your policy provides, you can purchase a separate general liability policy.

extra coverage (endorsements)

Most companies offer policy endorsements or add-ons that allow you to increase or add coverage. Common endorsements include coverage for:

jewelry, fine art, or electronics (your policy provides some coverage, but it may not be enough to cover expensive items).
sewer or drain reclamation.
damage to foundation or slab.
additional construction or repair costs to meet local building codes.
additional construction costs if your policy does not pay enough to rebuild your home.
mold removal.
earthquake damage.

coverage for short-term rentals

Most policies will not pay for damages or injuries that occur during short-term rentals. If you rent your home for short-term lodging, ask your insurance agent if you’re covered. you may need to purchase more coverage.

If you’re a guest in a short-term rental, your homeowners or renters policy may cover you if you damage a host’s property. ask your insurance agent before renting. If you’re renting through an app or website that offers insurance coverage, ask your agent if you need it.

more information: home sharing: 3 questions to ask | Watch: How to protect yourself if you have a short-term rental or rideshare

other types of property insurance

renters insurance covers your clothes, furniture and other personal property if they are stolen or damaged while you live in a rented house or apartment. renters insurance will not pay for home or apartment building repairs. the building owner’s policy does that. You may not need renters insurance if you are still a dependent. your parents’ homeowners policy may cover your property, even if you don’t live at home.
condo insurance covers your personal property and the interior of your unit. it also provides liability protection and pays additional living expenses.
Townhome insurance can cover the interior and exterior of your townhome, or just the interior. the difference depends on whether the community of owners has a master policy that covers the exterior. if so, you can buy a policy that covers only the interior. If the association’s master policy doesn’t cover the exterior, you can purchase a policy that covers both the interior and exterior. townhome insurance also covers your personal property and provides additional liability and living expense coverage.
mobile home insurance covers the mobile home, your personal property, and the additional living expenses. also provides liability coverage.
Farm and Ranch Insurance is for homes outside of city limits on land used for farming and ranching.

look: what to check before renewing your home insurance

understanding fees and premiums

Texas law requires insurance companies to charge rates that are fair, reasonable, and appropriate for the risks they cover. We don’t approve rates in advance, but if we find an insurance company’s rates are too high, we may require you to pay reimbursements to people you overcharged. insurance companies can appeal our decisions.

how do companies decide how much to charge me?

Insurance companies use a process called underwriting to decide whether to sell you a policy and how much to charge you. the amount you pay for insurance is called the premium. each company’s underwriting rules are different. This means that one company may be willing to sell you a policy, even if another company is not. it also means that different companies charge different rates.

Most companies consider these things when deciding on your premium:

the age and condition of your home. Companies can’t turn you down just because of the age or value of your home, but they can charge you more.
The replacement cost of your home. homes with higher replacement costs have higher premiums.
building materials. Premiums are higher for houses built entirely of wood. they are lower for houses built with brick or stone.
where you live. premiums are higher in areas that have more storms or crime.
availability of local fire protection. Premiums are lower for homes near fire stations.
Your claims history. Your premiums may be higher if you’ve had claims in the past.
Your credit score. Some companies use your credit score to decide how much to charge you. your premiums will be lower if you have good credit. however, a business cannot turn you down based solely on your credit. To find out which companies use credit scores, visit helpinsure.com.

learn more: how your credit score can affect your insurance rates

Insurance companies can check your claims history and those of your home.

Most companies use the comprehensive loss (track) underwriting exchange to learn about your claims history. Track Reports show the claim history of people and homes, regardless of who owns them, for the past seven years. a company may charge you more or refuse to sell you a policy based on the information in your trail report.

Companies can report information to give leads only if you filed a claim. You can dispute incorrect information. You can get a free copy of the report each year. call lexisnexis at 866-312-8076.

more information: how to get a clue about your claims history

your rights

An insurance company cannot:

turn you down or charge you more because of your race, color, religion, or national origin.
turn you down or charge you more because of your age, gender, marital status, geographic location, or disability unless that the company can show that you have a higher risk of loss than other people who are willing to insure.
reject you, charge you more, or treat you differently than other people in your rate or class of risk unless so the company can show that you are a higher risk than others.
turn you down or charge you more just because of your credit score.

save money on your insurance

ask your agent about discounts.

Discounts help lower your premium. each company decides what discounts to offer and the amount of the discount. you may be able to get a discount if you have:

a burglar alarm.
a fire alarm or sprinkler system.
an impact-resistant roof.
a new house or a house in good repair.
other policies with the same insurance company.
no claims for three years in a row.

Visit helpinsure.com to find out what discounts companies offer.

protect your home and property from crime.

The company you picked with the best policy and price may not want to sell you insurance if your home is in bad shape. to help protect your home from burglars:

install locks on doors and windows.
install a burglar alarm that calls the police or a security company.
eliminate hiding places for thieves and vandals. keep trees and shrubs trimmed, especially around windows and doors.
do not park cars on the street. cars parked on the street are tempting targets for thieves and vandals.
don’t leave your garage door open, even if you’re home. It only takes a minute for thieves to grab things from your garage and leave without you even noticing.
turn on outside lights at night or put outside lights on timers.
write an identification number on your property to help identify items if they are stolen.

keep your house and garden in good condition.

Someone from the insurance company will inspect the outside of your home when you apply for insurance. companies may charge you more or refuse to insure you based on what they see. to improve the safety and appearance of your home:

Replace rotted boards, warped screens, and other damage.
Fix walkway cracks, loose railings, uneven steps, and other things that could cause an accident.
replace a damaged or worn roof.
keep your yard, trees and shrubs neat and trimmed. remove tree limbs hanging over your house.
repaint if paint is peeling or fading.

lose your insurance

If you request it, the company must tell you in writing why it declined or did not renew your policy. You can complain to us if you think a company improperly denied, canceled or failed to renew your policy.

what happens if a company cancels my policy or doesn’t renew it?

cancellation means that you or the insurance company cancels the coverage before the end date of your policy. a company must give you 10 days notice before canceling your policy. A company can cancel your policy in the first 60 days if:

You learn of a risk that you were not told about and that was not part of a previous claim.
You do not accept a copy of an inspection report required before the policy begins.

An insurance company can cancel your policy at any time if:

stop paying your premiums.
file a fraudulent claim.
continuing the policy violates the law.
there is an increase in risk within your control that would increase your premium.

If you or the company cancel your policy, the company must refund any unearned premium within 15 days of the cancellation date. Unearned premium is the amount you paid up front that didn’t go toward coverage. For example, let’s say your premium is $100 a month or $1,200 a year. If you paid for the full year in advance, but then cancel your policy after a month, the company will owe you $1,100 in unearned premiums.

non-renewal means that a company refuses to renew your policy when it expires. a company must tell you in writing that it will not renew your policy. must notify you at least 30 days before your policy expires. if the company does not notify you in time, it must renew the policy if you ask.

A company may not renew its policy if:

your house is in poor condition. In lieu of non-renewal, the company may require you to repair the damage before renewing your policy. companies generally give you at least six months to make repairs.
you file three or more non-weather claims in three years. If you file two non-weather related claims, the company must tell you that you are in danger of non-renewal. if you don’t, you can’t refuse to renew your policy because of a third claim. The first two appliance-related water damage claims do not count if you have repaired the damage and it has passed inspection by a qualified inspector. a company may increase your rates if you file two or more non-weather claims.
your home is vacant for 60 days or more. most companies cancel your coverage if your house is unoccupied for that long. however, they generally do not stop your liability coverage. if you plan to be away from home for an extended period of time, check with your company to make sure your coverage continues.

A company cannot refuse to renew your policy if you file a claim for something your policy does not cover. however, you can increase your rates.

what if I can’t find a company willing to insure me?

If you can’t find a company to sell you a policy, you may be able to get coverage through the Fair Plans Association of Texas or a surplus lines insurance company. fair plan and surplus lines coverage is more expensive than coverage from a standard insurance company.

the fair plans association of texas sells basic homeowners insurance. You can get fair plan coverage if you can’t find a Texas-licensed company to insure you and at least two companies have turned you down. For more information, call your agent or the fair plan at 800-979-6440.

surplus lines companies are out-of-state companies that insure risks that companies in texas do not insure. Although they do not have a Texas license, they must meet state standards to sell insurance here. surplus lines companies must be licensed in their home state or country. Agents should make a good effort to find coverage with a Texas-licensed company before selling you a surplus lines policy.

owner claims

To help the claim process run smoothly, follow these tips:

Notify your company as soon as possible. Most companies have deadlines for you to file a claim. Some policies have a one-year deadline unless you can show good cause for the delay. If you have a wind and hail policy with TWIA, you have one year from the date of the damage to file a claim. For more information on twia claims, call our Coastal Outreach and Assistance Services team at 855-35coast (855-352-6278).
List your damaged property. If possible, take photos or videos of the damage before making any repairs.
Make only temporary repairs to protect your home and belongings. For example, board up broken windows or put a tarp over a damaged roof. do not make permanent repairs. the insurance company might deny your claim if you make permanent repairs before you see the damage.
save your receipts. To get full payment, you may need to prove to the insurance company that you replaced the destroyed items. receipts will help you do this. Also keep receipts for any supplies you purchased to make the repairs.
Try to be there when the insurance company adjuster reviews your damage. It’s a good idea to have your contractor with you. your contractor can talk to the adjuster about estimates and other issues.
make sure your company knows how to contact you. if you have to move, give your adjuster and the company your new address and a phone number where you can be reached.

learn more: how do i file a homeowners insurance claim? | Is it okay for a contractor to waive my deductible?

see: 4 ways to avoid contractor scams

After I file my claim, what can I expect?

Texas law sets deadlines for insurance companies to act after you’ve filed a claim. your company must:

tell you that they received your claim within 15 days. the company may ask you for a signed and notarized proof of loss form. You will need to list your damaged or missing items. Don’t forget to include small items like kitchen utensils and bathroom accessories. the company may ask you for other information. to help the claim process go smoothly, please provide all the information as soon as you can.
send an adjuster to review your damage. the adjuster will decide how much damage has and estimate the cost to repair or replace your property. the insurance company will base its payment on the adjuster’s estimate. After the company assigns an adjuster to your claim, the adjuster will likely be your main contact with the company. if the damage turns out to be worse than the adjuster originally thought, you or your contractor can talk to the adjuster to increase the estimate.
accept or reject your claim within 15 business days upon receipt of all damages. the information it needs from you. If the company denies your claim, it must tell you why in writing. the deadline may be longer after major disasters.
will send you a check within five business days after they agree to pay your claim. if the insurance company does not you meet the payment deadline, you can sue the company for the amount of the claim, plus interest and attorney fees.

There are some exceptions to the deadlines:

A company that needs more time may take 45 days to decide whether to pay your claim. must tell you the reason for the delay.
If a company suspects arson, they have 30 days to accept or deny your claim.
A surplus lines company has 20 business days to pay your claim after you agree to pay.
twia has 60 days to tell you whether it will accept or deny your claim. you can ask for more information. Once you’ve gotten the information you need and accepted your claim, you have 10 days to pay.

Learn more: Will my premium go up if I file a claim?

what if I need help negotiating my claim?

You can hire a public insurance adjuster to help you. public adjusters work for you, not the insurance company. Public adjusters charge fees for their services. Before you hire one, make sure you understand what you’ll have to pay.

Public adjusters cannot provide legal advice or participate in the repair of your property. they also cannot do anything that is a conflict of interest. Public adjusters must be licensed by TDI. To find out if a public adjuster is licensed, call our help line at 800-252-3439 or use the agent search feature on our website.

how companies pay claims

repair claims

If you owe money on your home, the insurance company will write the check for the repairs to both you and your mortgage company. When you receive the check, you will need to endorse it and send it to the mortgage company. In most cases, the mortgage company will deposit the check and give you the money as the job is done.

The mortgage company may ask you for more information before giving you the money. For example, you may need to give the mortgage company a list of the work that needs to be done and estimated costs, information about who is doing the work, and the deadlines. after the mortgage company gets the information, it must give you all or part of the money within 10 days. If your mortgage company doesn’t release the money on time, file a complaint with the Texas Attorney General’s office. call 800-252-8011 or visit texasattorneygeneral.gov.

if you have a replacement cost policy, most companies pay with two checks.

You will receive the first check after the adjuster has checked your damage. this check will be for the estimated cost of the repairs, less depreciation and your deductible. depreciation is an amount subtracted for wear or age. A deductible is the amount of the claim that you must pay yourself. read your policy or ask your agent if you don’t know how much your deductible is.

The insurance company will give you a check for the amount it withheld for depreciation after receiving the bill for the completed job. generally, you must complete the repairs within a certain period of time. ask your agent or adjuster if you’re not sure how long you have to repair or replace your property.

personal property claims

If you have to replace your clothes, furniture and other personal items, the insurance company will write you the check. if you have replacement cost coverage, you will receive two checks. the first will be for the actual cash value of the items. actual cash value is the cost to replace the item, less depreciation. once you have replaced the item, the company will issue you a check for the remainder of your claim amount.

claims for additional living expenses

If you have to move while your house is being repaired, your policy could pay for your extra living expenses or beer. additional living expenses include rent, food, and other costs you wouldn’t have if you were still in your home.

If your policy covers beer, it may be limited to 10-20% of the amount of dwelling coverage on your home.

Watch your spending to make sure you don’t run out of beer.

Your insurance company will pay your additional living expenses only up to the beer dollar limits of your policy. Because repairs to your home can sometimes take months, watch your spending to make sure you have enough beer to cover the entire time you’ll be away from home. If you reach your policy’s beer dollar limits before your home is fully repaired, you’ll have to pay the rest of your additional living expenses out of pocket.

solve problems

If you disagree with the adjuster’s estimate or the amount the company offers to pay you, tell the insurance company why. you may be able to work things out by talking to the company or adjuster. if that doesn’t solve the problem, here are your options:

request an appraisal. The appraisal process is for disputes over the amount of your claim. it is not for disputes over whether your policy covers a loss. If you use appraisal, you and the insurance company each hire an appraiser. the two raters then choose a third rater as referee. Your adjuster and the company’s adjuster each calculate the amount of your loss. if the estimates are different, the referee makes the final decision. The arbitrator’s decision is binding on both you and the insurance company. you pay for your adjuster and half of the arbitrator’s fees.
complain to us. your complaint must be in writing. you can use our online complaint portal.
solve your problem in court. you may need to file a lawsuit to resolve the problem. If the damage was caused by a disaster, you must notify the company in writing at least 61 days before filing suit. You can give less notice if waiting would cause you to miss the deadline to file a lawsuit.

If your claim is for less than $10,000, you can use the court of law. The Justice Court is a special court that handles small claims disputes. You do not need a lawyer, but you must pay a filing fee and other court costs up front. if you win, you can get that money back. For more information, call your county justice of the peace office.

more information: what happens if my insurance doesn’t pay enough?

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