Homeowners Insurance protects you financially if your home or property is damaged or destroyed by something your policy covers, like a fire or storm.
Texas has a Consumer Bill of Rights for home and renters insurance. Your insurance company will give you a copy of the Bill of Rights when you get or renew a policy.
Is Homeowners Insurance required?
The law doesn’t require you to have home insurance. But if you still owe money on your home, your lender will require you to have it. Even though it’s not legally required, home insurance is a good idea because it helps protect your home and other assets.
In this guide:
- Types of home insurance coverages
- Other coverages you might need
- Understanding rates and premiums
- Saving money on your insurance
- Losing your insurance
- Home insurance claims
- How companies pay claims
- Resolving problems
Types of Homeowners Insurance coverages
Home policies combine several types of coverage into one policy. Most home policies in Texas include these six coverages:
- Dwelling coverage pays if your house 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 aren’t attached to your house. This includes detached garages, storage sheds, and fences.
- Additional living expenses coverage pays if you have to move while your house is being repaired to fix damages your policy covers. Additional living expenses include rent, food, and other costs you wouldn’t have if you were still in your home.
- Personal liability coverage pays medical bills, lost wages, and other costs for people that you’re legally responsible for injuring. It also pays if you’re responsible for damaging someone else’s property. It also pays your court costs if you’re sued because of an accident.
- Medical payments coverage pays the medical bills of people hurt on your property. It also pays for some injuries that happen away from your home – if your dog bites someone at the park, for instance.
What risks does a Homeowners Policy cover?
Your home policy protects you against different risks, or perils. Risks and perils are things that could damage your house or property. This table shows common risks that most policies do and don’t cover. Coverages vary by company. Read your policy or talk to your agent to be sure of your exact coverages.
- Most policies cover damages from:
- Fire and lightning;
- Sudden and accidental release of water or smoke;
- Explosion;
- Theft;
- Vandalism, malicious mischief, riot, and civil commotion;
- Aircraft and vehicles;
- Windstorm, hurricane, and hail (but not if you live on the Gulf Coast);
- Most policies don’t cover damages from:
- Flooding;
- A continuous water leak; policies also won’t cover mold removal, except to repair damage caused by a covered risk;
- Termites, insects, rats, or mice;
- Losses that occur if your house is vacant for the number of days specified by your policy;
- Wear and tear;
- Earthquakes or earth movement;
- Wind or hail to trees and shrubs.
Replacement Cost vs. Actual Cash Value coverage
Home policies provide either 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 house and personal property at current prices. For example, say you bought a new roof 10 years ago and the current price for 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 today’s prices. If you have a $2,000 deductible, your company would pay $8,000.
- Actual cash value coverage pays replacement cost minus depreciation. Depreciation is a decrease in value because of wear and age. In the same example of the 10-year-old roof, the actual cash value might be $7,000. After your $2,000 deductible, your company would pay $5,000. You’d have to pay the rest of the cost of the new roof yourself. This means your total out-of-pocket costs for an actual cash value policy would be $5,000, compared with $2,000 for a replacement cost policy.