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Residential Insurance in Texas

Home insurance refers to any policy that covers residential property: damage to property, liability, or legal responsibility for any injuries inflicted and damage to property of others caused by individuals or their families.

The Texas Department of Insurance (TDI) is the regulatory body for home insurance in Texas. The various types of home insurance coverage in Texas include but are not restricted to dwelling coverage, personal property coverage, other structures coverage, loss of use coverage, personal liability coverage, and medical payments coverage.

A typical home insurance covers damages from theft, explosion, fire, lightning, smoke, vandalism, riot, aircraft, and vehicles. Additionally, it covers damages from windstorms, hurricanes, and hail, but this does not apply to individuals who live in at-risk areas like the Gulf Coast. Home insurance does not cover damages caused by flood, earthquake, wear and tear, insects and wind, or hail to trees and shrubs.

Generally, the types of residential insurance individuals go for depends largely on the type of houses they reside in and whether they are homeowners or renters of the house. For example, besides getting home insurance, homeowners who reside in a condo should consider getting condo insurance. Also, homeowners who decide to rent their homes are advised to get landlord insurance, while those who rent houses should consider getting renter insurance.

Why Do We Need Residential Property Insurance?

The United States Census Bureau reported that Texas had a resident population of 29,527,941 in July 2021. As of 2022, there were about 11,877,163 housing units in Texas, with 62% (almost 7.5 million) of them owner-occupied and 38% available for rent.

Rural counties can have very high percentages of their housing units owner-occupied. For instance, Terrell County has up to 93% of its housing units owner-occupied. In addition, Kenedy County, which has the highest number of Renters, has nearly 77% of its housing units as rental units. These statistics show the need for insurance coverage for both homeowners and renters. Consequently, there are several reasons why residential property insurance is beneficial to both homeowners and renters. These reasons include the following:

  • It provides coverage to people's houses against losses and damages from earthquakes, floods, lightning, storms, theft, vandalism.
  • Besides providing coverage for people's houses, residential property insurance also provides coverage against loss or damage of contents like jewelry, clothes, furniture, appliances, and other personal belongings kept in the insured home.
  • It gives individuals a sense of safety whenever damage occurs to their properties.
  • It provides liability coverage that covers homeowners or renters against personal injuries, property damage to guests, and other third parties they might have incurred while residing in the insured house.
  • It covers additional living expenses individuals may incur if they have to move out of their house due to damages.

How Does Residential Property Insurance Work in Texas?

The Texas Department of Insurance (TDI) regulates insurers and other companies that conduct insurance business in the state and provides assistance to Texas-based insurance consumers.

This regulation is necessary considering the high rise in the number of insurance companies as well as insurance-based businesses.

According to statistics provided in 2020 by the Insurance Information Institute (III), Texas had about 198 domestic P&C insurers, which happens to be the largest in all of the US. Also, in that same year, the total amount of direct P&C Insurance premium written in Texas was almost $64 billion ($63,870,752,000), which is higher than neighboring states like Louisiana, Arkansas, Oklahoma, and New Mexico combined.

Texas accounted for the second-largest amount of the P&C direct premiums written in 2020, after California. Out of the direct premiums written in the state, almost $11 billion ($10,807,416,000) was written as Homeowners coverage which is nearly 17% of all P&C insurance in Texas.

Additionally, Federal flood coverage accounted for approximately 0.62% of state P&C ($393,780,000) and Private Flood accounted for 0.10% ($62,031,000) of the total P&C market in Texas.

Residential property insurance in Texas works as a policy that helps to insure a house or the place insurance holders live and their personal belongings. This insurance policy may be purchased from local insurance agents and companies licensed by the Texas Department of Insurance (TDI).

Individuals should always ensure they verify the licensure of their licenced insurance agent or insurance company. Interested persons who find it difficult to get insurance coverage from regular insurance companies or agents can reach out to the Texas FAIR Plan Association. After getting the residential property insurance, individuals must ensure they collect the Consumer Bill of Rights in English or Spanish from their insurance company or agent. This Consumer Bill of Rights outlines most of the important rights insurance consumers have under Texas law.

It is very important for individuals to file their claims with their insurance companies as soon as their building structures or properties sustain any damage.

The insurance company in Texas must let individuals know they received their claims and begin an investigation within 15 days after a claim has been filed. The insurance company also has the right to ask for any information they need from the insured. The company must either approve or deny the claim in writing within 15 business days after all necessary information has been gotten from the insured. If the company requires more time to process the claims, they must inform the insured and provide reasons for their request. If the request is approved, a 45 days extension can be granted. If the claim is approved, the company must pay the claim within 5 business days.

Individuals who are unsure of the information on their policies should make inquiries with their insurance agents or companies.

For more information regarding residential property insurance, interested persons should contact an insurance agent licensed by the Texas Department of Insurance (TDI).

As an alternative, you can also contact the Texas Department of Insurance at (800) 252-3439 or via email or the Office of Public Insurance Counsel (OPIC) at (877) 611-6742 or email.

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Texas Home Insurance 101

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What are the Types of Residential Insurance in Texas?

Residential insurance covers damages to the building individuals live in and injuries sustained by third-parties on the property or in relation to the insurance holder. There are different types of residential insurance in Texas. The type an individual would purchase would largely depend on what they want to protect and whether they rent or own the property.

The most common types of residential insurance in Texas include:

  • Home insurance
  • Dwelling insurance
  • Condominium insurance
  • Renters/tenants insurance
  • Liability coverage insurance
  • Townhouse insurance
  • Mobile home insurance
  • Farm and ranch insurance

Residential insurance in Texas is divided into 2 main types, based on what it protects:

Property: policies that protect against damages to property, such as fire, theft, and some weather damage or

Liability: policies that provide an insured party with protection against claims resulting from injuries and damage to other people or property.

Furthermore, the coverage is divided based on the owner and occupancy. All these types of insurance offer both the property and liability aspects of insurance coverage.

OWNER of the Property

HOMEOWNERS insurance: This is also called home insurance. This is a form of property insurance policy that covers damages from fire, tornadoes, hailstorms, theft, and other incidents that occur in a private residence. Most homeowner insurance policies do not cover damages from floods, earthquakes, termites, insects, rats, mice, and wind or hail to trees and shrubs. They also do not cover damages caused by a continuous water leak and failure on the homeowner's part to carry out routine maintenance on the property. Most home insurance policies in Texas include the following coverages:

  • Dwelling coverage: this covers a home after it has been damaged by a covered peril such as, but not limited to fire, wind, hail, and lightning.
  • Personal property coverage: compensates homeowners for personal items like furniture, clothing, and other things that are stolen, damaged, or destroyed in a covered loss.
  • Other structures coverage: this covers replacement or repair of structures on the homeowners' properties that are not attached to their house. This typically includes fences, detached garages, and storage sheds.
  • Loss of use coverage: this covers payment of additional living expenses to homeowners if they have to live somewhere else while their houses are being repaired to fix damages their policy covers. Additional living expenses include food, rent, and other costs homeowners would not incur if they were still in their homes.
  • Personal liability coverage: this covers payment of medical bills, lost wages, and other costs for individuals that the homeowner is legally responsible for injuring. It also covers homeowners if they are responsible for damaging someone else's property. Additionally, this coverage pays the court costs of individuals if they are sued on account of an accident.
  • Medical payments coverage: covers the medical bills of people hurt on homeowners' properties. It can also cover certain injuries that happen away from home, for instance, in the event that the individual's dog bites someone at the park.

CONDO insurance: this type of insurance covers homeowners' personal properties and the interior of their units from damages caused by theft, smoke, fire, vandalism, and sudden water damage. It also provides liability protection and pays additional living expenses. Most condo insurance does not cover damages due to lack of maintenance, floods, earthquakes, and water backup.

LANDLORD insurance: typically, it covers the home and other structures on the property, such as sheds or fences, from damages caused by fire, lightning, wind, hail, and other covered losses. This type of insurance provides coverage for items used to service the rented property.

COMMERCIAL PROPERTY insurance: is used to provide protection to apartment complexes. Owners of apartment complexes and condo buildings should consider getting Commercial property insurance to secure their properties. This policy protects buildings and business properties damaged by fire, explosions, burst pipes, storms, theft, and vandalism. Additionally, commercial property insurance can pay for some businesses' lost income if the company is unable to operate normally. However, most commercial property insurance does not cover damages caused by earthquakes and floods. Therefore, individuals will need to get a separate policy.

RENTER of the Property

RENTER insurance: this is also called tenant insurance. This insurance policy provides some of the benefits of home insurance but does not cover the dwelling or structure since renters do not own the building they live in. Although renters insurance isn't mandatory in Texas, landlords might require tenants to have it. Most renter insurance protects renter's belongings from theft or damages due to fire, smoke, theft or vandalism, and certain kinds of water damages, but they do not cover losses due to floods. Dependents do not need renter insurance. Their parents' home insurance policy might cover their belongings even if they are not living at home. On average, Texas renter insurance typically costs about $20 monthly. Renters insurance typically includes three types of coverage:

  • Personal property coverage: this covers renters' belongings, including items stolen from their cars or while traveling.

  • Loss of use: this covers renters' additional living expenses if they have to vacate their apartment for a short time because of damages from a covered loss.

  • Personal liability: protects renters if a third party is injured in their homes and pays legal costs if they are held liable and taken to court.

PROPERTY - Residential Insurance in Texas

Property insurance in Texas is a type of insurance policy that can provide coverage for property owners or renters against damages caused by fire, theft, smoke, wind, hail, and lightning.

The residential property insurance needed by individuals varies depending on whether the person is the owner of the house (and the house is owner-occupied or for rent) or a renter. The coverages needed in either case is as follows:

  • Coverage for Owning a Home: individuals who own an owner-occupied house should consider getting homeowners coverage, condo coverage, and the needed disaster coverage such as flood insurance and earthquake insurance. In contrast, homeowners insurance does not cover costs if someone else gets hurt or causes damage on a rented property. Hence, homeowners who rent out their homes should get landlord coverage.
  • Coverage for renters: landlord insurance does not cover the personal properties of renters. So, renters should ensure they get renters insurance to protect their belongings in the rented property from theft or damages.

LIABILITY - Residential Insurance in Texas

Liability insurance is a type of insurance policy that protects individuals against claims resulting from injuries and damage to other people or property.

It is important for both owners and renters to have liability coverage. This is because owners' liability insurance would not cover renters whenever they accidentally cause harm to others and vice versa. Owners should consider getting homeowners liability insurance, condo liability insurance, and landlord liability, while renters should get renter liability insurance.

  • Homeowners Liability coverage: this type of insurance covers property owners when a claim is filed against them for injury or property damage caused to a third party. It also covers damages caused by the insured's pets.
  • Condo Liability Insurance: this protects individuals financially from bodily injury or property damage they cause to others.
  • Landlord Liability Insurance: this protects landlords financially against any claims from a tenant or guests of the property. Additionally, it covers any medical or legal bills that might arise for injuries sustained by tenants or guests on the rented property.
  • Renter Liability insurance: this policy covers individuals renting a property whenever they cause harm to others by accident or through negligence.

Homeowners Insurance vs. Condo Insurance: How are They Different?

The major difference between homeowners insurance and condo insurance is how much property the policies are designed to cover. Homeowners insurance typically covers damages done to a house and other structures on the property. In contrast, condo insurance covers damages to the interior of the individuals' unit(s) and their personal belongings.

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Why Do I Need Insurance for My Home in Texas?

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How Much Home Insurance Coverage Do I Need?

It is not mandatory for homeowners to have home insurance coverage in Texas. However, lenders may require individuals who owe money on their homes to have it. Although having home insurance is not legally required, it is advisable for homeowners to get their homes insured because it provides protection as well as risk coverage for their homes. There are different forms of home insurance coverage that offer various levels of protection depending on the needs of the individuals and the type of residence being insured. Hence, homeowners should do their due diligence to buy the right kind and amount of home insurance for their homes. When making considerations on what home insurance coverage to go for, it should, in the least, be enough to cover the cost of:

  • Rebuilding the home.
  • Replacing personal properties.
  • Treatment of injuries and damages that might happen on the property (liability).
  • Reimbursing homeowner's living expenses after the loss of an insured home.

Can You Over Insure a Residential Property?

Over-insurance is very common among individuals, such that they tend to pay more in premiums for coverage that their houses do not even require. Over-insurance typically occurs when individuals buy insurance coverage that exceeds the property's actual value or replacement cost. For instance, getting $300,000 worth of insurance for a house with a market value of $200,000 is considered over-insurance. Ideally, your insurance coverage should be able to cover the cost of rebuilding your home from scratch at current construction costs. Anything above that is over-insurance. Always talk to your state-licensed home insurance professional if you are confused about how this works. They will be able to help you make the right insurance decisions.

Can You Under Insure a Residential Property?

A residential property can be underinsured, and individuals might not know this until it is too late. Underinsurance occurs when homeowners don't have enough home insurance coverage to protect them in the event of damage incurred on the home or property. Underinsurance can result in homeowners paying a large part of the repair construction costs for damaged property. For example, if a house is underinsured by 20 percent and costs $300,000 to rebuild, the homeowner will be short by $60,000. Therefore, individuals should always ensure they have the right amount of coverage. Here are some tips that could help:

  • Entering the value of your home based on market, appraised or assessed value is wrong. It is best to insure your home using the rebuild value.
  • Talk to your Texas-based licensed Property and Casualty (P&C) insurance professional to analyze your needs and figure out the cost of rebuilding your home.
  • Ensure your insurance coverage is the same as the cost to rebuild your home.
  • Always review your home insurance policies every year to ensure your home is not underinsured.

Does Residential Property Insurance Cover Solar Panels?

Residential property insurance covers solar panels because rooftop-mounted solar panels are considered part of the home. This policy covers solar panels against perils, including but not limited to wind, hail, lightning, vandalism, fire, etc. individuals should do their due diligence to check their policy to determine eligibility and coverage limits. If you discover that your policy does not cover solar panels, contact your insurer to review the existing policy, or reach out to a state-licensed home insurance agent for a new quote.

Most insurers will incorporate solar panel coverage into the existing residential property insurance policy for little or no added cost. However, it is worth noting that individuals may need additional coverage for a ground-mounted solar system and solar panel carports since it is not part of the actual dwelling.

Do Solar Panels Affect House Insurance?

Yes, they do! Solar panels might typically increase the price of home insurance. To know the specifics of solar panels' effect on house insurance, homeowners should speak to their insurance agents. Interested persons should ensure they discuss their plans with their insurance agents or companies before installing the solar panels.

How Much Does Home Insurance Go Up With Solar?

Most times, homeowners insurance premiums tend to go up when individuals add solar panels to their houses and coverages.

This is basically because solar panels are very expensive, and adding the replacement cost is likely to increase individuals' coverage limit. "Coverage limit" here refers to the maximum amount a person's insurance policy will pay for a covered loss. As a person's coverage limit increases, the insurance premium will also increase in most cases. Hence, individuals attempting to add solar panels to their insurance coverage should first talk to their insurance agent about the coverage limits. This will help them ensure that the coverage limit of their policy is enough to repair both their homes and their solar panels in the event of unforeseen disasters. The increase in the cost of home insurance due to the addition or presence of solar panels on or around the property depends largely on the insurance company as well as the packages offered.

Does Home Insurance Cover Hail Damage to Solar Panels?

Home insurance covers hail damages caused to solar panels mounted on the rooftop of a house.

However, this might not apply to individuals who live in high-risk areas like the Gulf Coast. In addition, home insurance policies do not cover ground-mounted solar systems and solar panel carports because they are not part of the house. Therefore, individuals would need to get additional coverage for those.

Does Residential Property Insurance Cover Leaks?

Residential property insurance covers unexpected and sudden leaks in the home. Homeowners who discover leaks in their homes should act immediately to prevent further damage. Stopping the leak is the most important thing to do in such a situation. To prevent further damages after water leaks, individuals should:

  • Turn the water off at the main valve or at the valves under the sinks and near appliances.
  • Try to ensure everywhere is dry immediately to prevent more damage and mold growth.
  • Take wet items to a dry room or a place with fresh air.
  • Remove wet carpets and rugs.

Does Home Insurance Cover Water Damage?

Most Texas home insurance policies cover accidental and sudden water damages, excluding damages that occurred gradually, such as a slow, constant leak, as well as damage due to flooding. Additionally, water damages that create a need for mold removal are excluded from home insurance policies. However, Individuals who want this kind of coverage can typically add additional coverages as optional riders. Discuss your options with a state-licensed residential property insurance agent.

Does Home Insurance Cover Plumbing Leaks?

Home insurance policies typically cover unforeseen plumbing leaks that do not occur gradually. However, this policy does not cover plumbing leaks that occur due to wear and tear or a lack of maintenance. In addition, backed-up sewage systems are not included in home insurance coverage, even though they may overload the plumbing system. Therefore, it is advisable for individuals to attend to minor leaks immediately and add an optional sewer or water backup coverage to their home insurance policy to prevent hazards caused by sewage damages. Speak to a licensed property insurance agent to go over your policy's coverages and exclusions.

Does Home Insurance Cover Foundation?

In Texas, most home insurance policies cover the cost of repairing a foundation, especially in the case of certain events like fire, explosions, and accidental or sudden water damage. However, damages to the foundation caused by shifting soil and faulty construction are not usually covered by a typical Texas home insurance policy. Also, significant foundation damages caused by earthquakes and floods require their own insurance policy.

Does Home Insurance Cover Natural Disasters?

According to the National Aeronautics and Space Administration, Texas is ranked first in the United States in the variety and frequency of natural disasters like wildfires, flooding, tornados, hurricanes, hail storms, erosion, earthquakes, and drought. Hence, there is a great need for individuals to have insurance that covers natural disasters. There are different types of home insurance that cover damages resulting from natural disasters in Texas. They include:

  • Homeowners insurance - Home insurance policy covers many natural disasters like fire, lightning, windstorm, hurricane, and hail, however, this policy does not cover damage caused by floods or earthquakes. Individuals would need a separate policy for damages caused by floods or earthquakes.
  • Condo insurance - most condo insurance policies cover losses arising from fire, lightning, windstorm, hurricane, and hail. However, this insurance policy is not available to individuals in high-risk areas like the Gulf Coast.
  • Landlord insurance - landlord insurance typically provides coverage for most damages caused by natural disasters, excluding damages resulting from floods and earthquakes.
  • Renter insurance - Most renter policies will cover losses due to natural disasters such as fire. They do not cover losses due to floods.
  • Apartment complex insurance - Commercial property insurance that covers apartment complexes covers damages from some natural disasters.

Earthquakes, sinkholes, and landslides are considered "ground movements" and are usually excluded from coverage.

Individuals who need additional information or have any concerns regarding any insurance policy should contact a licensed insurance agent or company. Insurance professionals would help interested persons review their policies and help identify areas where they may need to purchase separate coverage or adjust their current coverage. In addition, individuals should always verify as to whether the insurance agent or company they intend to work with is duly licensed by utilizing the License lookup portal on the TDI website.

FLOOD INSURANCE

Home insurance does not cover flood damage.

Flood insurance is a separate policy offered by the federal government through the National Flood Insurance Program (NFIP). Flood insurance typically covers losses directly caused by flooding. This coverage helps property owners, renters and businesses recover faster from flood damages when floodwaters recede. Flood insurance covers overflow of inland or tidal water (such as storm surge), runoff or buildup of surface water like flash floods, and mudflow (such as flowing mud on the surface of normally dry land), however, it does not cover broken pipes, overflow of plumbing systems, and rain coming into individuals' homes through a wall, window, or roof.

For more information or inquiries regarding flooding insurance, interested persons can contact the FEMA Mapping and Insurance eXchange (FMIX) center at (877) 336-2627 or by email.

TORNADO INSURANCE

Tornado insurance in Texas is a coverage that insures a property against damage caused by tornadoes.

Although home insurance covers tornado damages, it does not cover extreme damages that occur in Gulf Coast areas.

Additionally, homeowners policy does not cover damages that affect trees and shrubs. Residents living in those areas are advised to get additional windstorm insurance from the Texas Windstorm Insurance Association (TWIA). Individuals should get TWIA coverage from local insurance agents because TIWA does not sell policies directly to consumers. Depending on where the individuals reside, they may need to purchase flood insurance before TWIA sells them additional coverage. They may also need a home inspection by an engineer or a windstorm inspector.

Individuals can contact TWIA online or at (800) 788-8247 for more information on tornado coverage.

HURRICANE INSURANCE

A great number of home insurance policies typically cover damages from hurricanes.

However, this does not apply to individuals who live on the Gulf Coast. Residents of high-risk areas are required to get windstorm and hail insurance from the Texas Windstorm Insurance Association (TWIA). Individuals can not buy TIWA coverage by themselves, they would have to work with insurance agents who are registered with the association. Interested persons can find registered agents on the TIWA website.

For more information regarding hurricane insurance, individuals can contact TWIA online or at (800) 788-8247.

EARTHQUAKE INSURANCE

Earthquake insurance is a policy that covers losses and damages caused by earthquakes. Home insurance does not cover property damages caused by earthquakes or earth movements. Since Texas is one of the most earthquake-prone states in America, it is recommended that residents have earthquake insurance as an add-on to their existing policy.

Individuals interested in getting earthquake insurance or who need more information regarding the coverage should contact a licensed insurance agent in Texas.