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Homeowners Insurance in Texas

Homeowners insurance is a type of property insurance that provides financial coverage for damages and losses to a person’s place of residence (including the furniture, fittings, and other assets). Only the owner of the property may get this coverage.

Homeowners insurance typically covers damages caused by fire, theft, bad weather, storm, vandalism, or any other thing your policy covers. Although the Texas law does not mandate homeowners to have homeowners insurance, it is advisable, as it protects you from unplanned expenses that may arise from damages caused by covered perils. Homeowners’ insurance is not optional for persons who still owe money on their homes. The law permits mortgage lenders to require homeowners who still owe money on their homes to have homeowners insurance.

The Texas Department of Insurance (TDI) is the state body that regulates home insurance in Texas. Texas has six major home insurance coverages, including dwelling coverage, personal liability coverage, medical payments coverage, personal property coverage, loss of use coverage, and other structures coverage.

What is Considered Homeowners Insurance?

Homeowners insurance is defined as a part of property insurance that insures a policyholder’s owned home and the assets contained within it in the event of a disaster such as fire, bad weather, storm, vandalism, and theft. Most homeowners insurance policies in Texas are package policies, implying that the coverage is not limited to damage to your property but also your liability. This means that if anyone gets injured on your property, the liability portion of your homeowners insurance policy will also pay for those injuries and property damage, up to the policy limits. Personal liability coverage may also extend to lawsuits you may face as a result of the incident. However, note that the extent of homeowners insurance coverage a person gets is determined by their contract with the homeowners’ insurance company insuring them.

Consult with an experienced state-licensed homeowners insurance professional who can evaluate your insurance needs and make suggestions specific to what you need.

What is the Point of Homeowners Insurance?

Homeowners’ insurance is designed to protect policyholders and provide coverages based on their insurance needs. It provides coverage to repair or rebuild your home after perilous events covered by your insurance policy, such as fire, smoke, theft, or vandalism. It also provides coverage for some damages caused by weather, such as lightning, wind, or hail. However, it does not cover damages caused by floods, earthquakes, and other natural disasters that are excluded from your insurance policy.

What is Homeowners Insurance for?

Homeowners insurance is specifically for owners of residential properties who want to protect their homes and the assets in their homes from events that may lead to any form of damage. Homeowners insurance only provides coverage for damages within the homeowner’s insurance policy. Therefore, if a person only pays for “dwelling coverage” under their homeowner’s insurance policy, the insurance policy will not cover repairs to damages on structures. Such structures may include detached garages, storage sheds, and fences on their property that are not attached to their house. The homeowner will need to be insured under the “other structures coverage” to be covered.

What are the Types of Homeowners Insurance?

The Texas Department of Insurance highlights the six major homeowners coverages available in Texas:

  • Dwelling coverage: It is designed to protect you from financial losses that may arise from your house being damaged or destroyed by a peril your policy covers, such as fire, or bad weather.

  • Personal property coverage: This insurance coverage policy covers damages, theft, and destruction to your furniture, clothing, and other tangible items in your house, such as a policyholder’s electrical device or furniture being damaged or stolen during a burglary.

  • Other structures coverage: It compensates the insured for damages and destruction to structures on their properties that are not attached to their houses. Some structures covered are detached garages, tree houses, storage sheds, and fences.

  • Loss of use coverage: It provides coverage for a policyholder’s additional living costs in situations where they have to temporarily vacate their house while it is being repaired to fix damages their policy covers. Examples of additional living expenses covered are rent, food, and other expenses that would not be incurred if they still stayed in their house.

  • Personal liability coverage: This covers persons a policyholder is legally responsible for injuring in the event of an accident occurring in their house. It covers medical bills, lost wages, and other related costs. It also pays if a policyholder is responsible for damaging another person’s property. If a policyholder is sued because of an accident, their court costs will be paid under this coverage.

  • Medical payments coverage: This coverage pays the medical bills of people hurt on a policyholder’s property. It also covers certain injuries that happen away from a policyholder’s house, such as a policyholder’s dog biting someone at the park.

When considering what homeowners insurance coverages you will need for your home, make sure to speak with only state-licensed and experienced insurance professionals, who can legally provide advice based on your specific needs.

Do you Need Homeowners Insurance in Texas?

Let's review:

Why Do you Need Homeowners Insurance?

Most times, perils and disasters like fire, theft, vandalism, and even natural disasters happen in the most unexpected moments. When they occur, they result in unplanned expenses and financial burdens that could have been avoided or minimized with homeowners insurance. Therefore, every homeowner needs homeowners insurance coverage to avoid or minimize financial losses that may result from such unpleasant events.

Damage from hail is the most common claim for homeowners insurance in Texas. Hail damage usually affects roofs, windows, and siding of residential homes.

A new homeowner will need to get homeowners insurance coverage if they want to get a mortgage from a bank. It is a mandatory requirement for mortgages in all banks. This is how the bank protects its financial investment in your property.

How Much Homeowners Insurance Do you Need?

As you are planning your coverage, you must deal with the insurable value of the home. It is set according to the current real estate market and the rebuild costs (Rebuild Values). The amount of coverage you get should cover what it will cost you to rebuild your insured house from scratch. The higher the chance of a peril (risk), the less you want the deductible to be.

Texas sees quite a lot of hail. In 2020, Texas was the state with the most hail claims. It had the highest number of properties affected by hail (over 1.5 million properties), which is almost a quarter of the total U.S. properties affected. In Texas, you may want to carry lower deductibles, so you do not have to pay so much money out of your pocket for damage repairs after the next hail storm rolls through.

Frequently, new homeowners get higher deductibles to save on the monthly payment at first, until the inevitable happens and the roof gets damaged. Then all of a sudden such new owners may realize that their roof (Wind and Hail coverage) has a 3% deductible.

Assuming that the house in the example is valued and insured at $300,000, the 3% deductible is $9,000. The whole roof replacement usually costs less than that, which means that this roof repair is now fully funded out of the homeowner’s own pocket, and the insurance company is the only winner. In this case, your insurer:

  • gets to keep all your premiums (that you paid up until the claim)

  • does not spend any of its resources to help you fix the home

  • requires you to actually fix the roof in order to continue coverage. So you can NOT fix the damage and expect it to be insured as a fully functioning house.

Furthermore, the amount of homeowner insurance coverage a homeowner needs is also influenced by whether they have a mortgage. A homeowner with a mortgage may need to get at least a minimum bank-required amount of dwelling and liability coverage, with deductibles that make financial sense. This protects their investment and that of their mortgage lender. Dwelling coverage helps pay for repairs or rebuilding of a policyholder’s house and any attached structures, such as a deck, garage, or front porch if they are damaged by a covered peril. On the other hand, liability homeowners coverage pays for the injuries to persons who get hurt in the policyholder’s home. In addition, if a homeowner lives in an area susceptible to specific perils (for example, Tornados, Hurricanes, or Floods), they may need to get at least the minimum coverage of such specialized insurance coverages.

Contact a knowledgeable Texas-licensed homeowners insurance professional to assess your needs and make personalized recommendations on how much homeowners insurance you need based on your local risks.

What Homeowners Insurance Coverage Do you Need in Texas?

The type of homeowners insurance coverage you need depends on the type of house you live in, its value, and the risks your area is susceptible to. Your budget is usually not an issue. You get whatever you must get. There is no point in over-insuring a home since you get paid only what it costs to fix/rebuild. Under-insuring a home (which happens by mistake or not updating coverage annually - to reflect the current prices of repairs/rebuilding) is also a wrong move. Your "cheap" coverage may not reflect the current costs of materials and labor to cover all of your repairs, making it mandatory for you to pay for your repairs out of your pocket.

What if you have a mortgage and you paid for insurance (as required), but now your insurance cannot cover the rebuild? Now the mortgage company is getting upset since their investment cannot be repaired - and you still owe money for it.

Carry only the needed amount of coverage. No more, no less. Do not overpay for needless coverage. Discuss your needs with knowledgeable and experienced Texas-licensed homeowners insurance professionals.

Is Homeowners Insurance Required by Law in Texas?

No. Homeowners insurance is necessary and usually required by the mortgage-financing institution, but the law does not mandate Texas residents to get it.

How Does Homeowners Insurance Work?

Homeowners insurance is structured to serve as a cover against the loss of funds that may arise from perils covered by the homeowner insurance policy. Homeowner insurance works like every other form of insurance, which protects against financial losses. When a peril covered by the homeowner insurance policy occurs (e.g., fire, vandalism, or a tree falling on your roof), the policyholder files a claim with the insurance company. Upon receiving this claim, the insurance company assesses the damage, verifies the coverage, subtracts the deductible, and pays out the remaining amount to the insured to repair and rebuild the home.

What Does Homeowners Insurance Cover?

Typically, homeowners insurance covers certain risks and perils that could cause any degree of damage to the interior or exterior of your apartment or property. The insurance company and the coverage policy mainly determine the different coverages of homeowners insurance in Texas. Speak with a state-licensed homeowner insurance professional to determine what your policy covers. Some covered perils in homeowners insurance in Texas are:

  • Sudden and accidental release of water or smoke

  • Fire

  • Lightning

  • Smoke

  • Theft

  • Explosion

  • Vandalism, malicious mischief, riot, and civil commotion

  • Aircraft and vehicles

  • Windstorms, hurricanes, and hail

(This applies only if you do not live in the Gulf Coast region of Texas because houses on the Gulf Coast are more susceptible to higher windstorm or hurricane damages than normal. Hence, before you purchase a house in this area, you will need to confirm whether the house has a windstorm insurance certificate (WPI-8). On the other hand, if the house does not have a windstorm insurance certificate (WPI-8), you may try to get windstorm insurance before purchasing the home.

You can find registered agents by using the [Find an Agent portal on the Texas Windstorm Insurance Association website. For more information regarding hurricane insurance, reach out to TWIA online or at (800) 788-8247.

What is Homeowners Insurance Good for?

Homeowners insurance in Texas is good for the protection of your home and other valuable assets inside your home. So if the covered risk occurs, you are covered by your homeowners insurance policy, and you will not have to bear the financial burden of this loss out of your own pocket.

What Does a Typical Homeowners Insurance Include?

Homeowners insurance includes coverages that will help you pay to repair or rebuild your home and properties within it if they are damaged or destroyed by certain perils, such as fire or theft. Depending on your homeowner insurance policy, it may also include coverage for medical costs if you accidentally damage another person's property or if a guest gets injured in your home. The Texas Department of Insurance provides a directory list of professional state-licensed homeowner insurance agents in the state. Upon request, these agents may recommend coverages that you should include in your homeowner's insurance policy.

Who is Covered by Homeowners Insurance?

Homeowners insurance covers the interests of the owner of the property and, by extension, the financial interests of the bank that finances the mortgage on the property. The people your homeowner’s insurance cover mainly depend on the type of coverage you have and your insurance company. The liability and medical payments portion of the homeowners insurance policy covers anyone injured on the property

What Does Homeowners Insurance Not Cover?

While homeowners insurance has a wide range of coverages, some risks (perils) are outside its scope.

What Does Homeowners Insurance Typically Exclude?

The exclusions of homeowners insurance mainly depend on the type of policy you pay for. However, it is typical for homeowners insurance not to include wear and tear, flooding, earthquakes, tsunamis, etc. For example, if a policyholder resides in a flood-prone area like Houston, Brownsville, San Antonio, Galveston, or Waco, getting just homeowners insurance may not be enough because flooding is not covered under homeowners insurance. You must check the elevation of the property and if it is located in the flood zone. The policyholder will have to get Flood insurance separately. Similarly, homeowners insurance does not cover damages to the fittings or furniture of the house caused by rats, mice, termites, or insects. Talk to a knowledgeable state-licensed homeowner insurance agent_ _in Texas to learn more about what is not included in your homeowner’s insurance policy.

Homeowners insurance in Texas typically excludes:

  • Natural disasters, including earthquakes, landslides, sinkholes, floods, tsunamis, or nuclear disasters. If you live in an area that is susceptible to any of these natural disasters, then it is necessary for you to get an insurance policy that insures your property against damage. For instance, if you stay in an area where earthquakes are prominent, you will need to get Earthquake insurance because regular homeowners policy does not cover the shifting on the soil. Likewise, if you live in an area where floods are common, then you need Flood insurance.

  • A continuous water leak. Homeowner insurance does not also cover mold removal, except to repair damage caused by a covered peril. In the case of a water leak, you may get water backup insurance. Water backup insurance works as an endorsement on your homeowners insurance policy covering damages caused by water backing up into your home. Typically, water backup may be endorsed for $5,000, $10,000, or $25,000 in coverage and may also be subject to its own deductible. Discuss the details and exclusions with your trusted property insurance agent before getting this added to your policy.

  • Rats, mice, termites, or insects. If these pests are very prominent in your area and are a source of concern for you, you may need to get a wildlife and pest control insurance policy.

  • Wear and tear. You can get home repair insurance, also known as home warranty or home maintenance insurance. It covers wear and tear to major home systems and appliances.

  • Damages caused by leaving your house vacant for the number of days defined by your policy. Vacant home insurance or unoccupied home insurance will cover such damages if your home is empty for longer than your standard policy will allow. In Texas, most home insurers will cancel the homeowners insurance coverage if the home has been vacant for over 60 days (2 months).

  • Wind or hail to trees and shrubs. Windstorm insurance insures you against such perils, especially if you live in a high-risk area.

What is an Example of Homeowners Insurance?

Some examples of homeowners insurance coverages are damages caused by fire, vandalism, theft, and explosion. For instance, if a policyholder’s house is destroyed by an accidental fire, their home insurance policy will pay a specific amount to repair the damages caused by this fire. Also, in the event of a riot that leads to a policyholder’s house being vandalized, their home insurance policy will pay for the losses incurred.

What is the Most Common Use of Homeowners Insurance in Texas?

Getting a house is a significant investment that needs to be kept from disrepair and protected from the possible risks:

The most common use of homeowners insurance in Texas is to pay out claims for:

  • Wind & Hail - Texas is known for high winds, sporadic tornadoes, and seasonal hail storms. Roof damage from hail is the number 1 risk to Texas homes and the roof replacement may cost $5,000 to $20,000 or more (depending on material and size).

  • Water damage - Homeowners insurance covers damage only from the burst pipes and appliance leaks. Flooding from natural disasters is not covered. (Note: If your Texas property is in the Flood-prone area, you need to get Flood insurance coverage as a separate policy)

  • Fire and Lightning - While lightning claims are not as common, fire claims are a much more common occurrence in Texas.

  • “Other” Property Damages - Damage from fallen trees, a car running into a closed garage door, broken window are all covered by homeowners insurance. Without it, all such repairs would come out of the property owner’s pocket.

  • Liability - Liability claims are any claims where someone got hurt, or someone’s property was damaged while on your residential property. For example, if a visitor trips on a door threshold and gets hurt, your homeowner's liability pays for the medical expenses.

  • Theft - Theft coverage helps reimburse the stolen items and whatever gets broken while the thieves were getting in and out. If a door or a window was broken, they are covered.

  • Freezing - In recent years, as Texas struggles with below-freezing temperatures and power outages, freezing claims have been increasing.

What is the Difference Between Homeowners Insurance and Renters Insurance?

The main difference between homeowners insurance and renters insurance is the persons both policies are designed to cover. Renters insurance is only for persons who do not own the dwelling unit they live in but want to protect their personal belongings, while homeowners insurance is for the actual owners of the residence (regardless if they reside in it or rent it out).

Texas homeowners’ insurance covers the actual building the homeowner lives in, including the structures attached to the buildings, such as garages. Homeowners’ insurance does not cover renters or the tenant’s personal belongings contained in the house. Only renter’s insurance policies would compensate renters for the replacement cost of property lost or damaged while on a rented property. Conversely, homeowners insurance covers both the cost of repairing/replacing the home and the personal property of the homeowners in it (such as furniture, electronic devices, clothing, jewelry, and dishes) in the event of a loss.

Do I Need Homeowners Insurance if:

Do I Need Homeowners Insurance if my House is Paid for?

Although it is not mandated by law to have homeowners insurance after paying off the mortgage, it is advisable to get a homeowners insurance policy to protect your fully-vested investment. Now that your home is finally paid off and the bank is no longer dictating the requirement to maintain proper home insurance coverage, the full risk is up to you to manage. If any damage or loss occurs, you - the owner must pay for the repairs out of pocket or you need to maintain an affordable homeowners insurance policy to provide you with the safety of peace of mind. However, note that you can own a home in Texas without homeowners insurance by law.

Do I Need Homeowners Insurance if I Live in a Condo?

No, you do not need homeowners insurance if you live in a condo because condos are served by a different type of insurance - Condo insurance.

The condo association owns a condo or co-op's building and common areas. These areas are covered by the condo or co-op association's master policy. The funds for the insurance policy are contributed by the persons staying in the condo via condo or homeowner assessments, known as HOA fees. However, the condo association's master policy does not cover damage to your unit, injuries that occur in your unit, and the personal belongings in your unit. You can get condo insurance to protect the personal belongings in your unit. Speak with a knowledgeable and state-licensed residential property insurance professional to weigh your insurance options and choose what most suits your home.

Do I Need Homeowners Insurance if I Have PMI?

Yes, typically, mortgage lenders require you to have homeowners insurance before taking out a mortgage loan to buy a home. Private Mortgage Insurance (PMI) is a form of insurance that some lenders may require to protect their interests supposing you default on your loan. However, it does not cover the home or protect the homebuyer; it only protects the lender if the homebuyer is unable to complete payments for the home.

When Does Homeowners Coverage Begin?

For most insurance companies in Texas, there is no waiting period for homeowners insurance for most insurance companies in Texas. Coverage begins after a policyholder makes their first payment and their house has been inspected. Most insurers allow policyholders to choose the date they want the homeowners coverage to begin after buying it.

Who Can Get Homeowners Insurance in Texas

Who Qualifies for Homeowners Insurance?

All homeowners, with paid-off houses or with mortgages qualify for homeowners insurance. However, getting good and affordable homeowners insurance may be more difficult if you fall in any of the categories listed below:

  • Your home is in an uninhabitable condition and/or requires major repairs. Homeowners insurance offers dwelling coverage, which can cover such repairs.

  • Your home is located in an area that is considered high-risk or dangerous due to its exposure to powerful forces of nature such as hurricanes, earthquakes, and floods. For flood-prone areas, flood insurance is necessary, while earthquake insurance will help mitigate damages caused by earthquake.

  • You have a bad claims history or credit score due to underwriting risks such as having a pool, an old roof, or a vicious breed of dog. Consult with a knowledgeable state-licensed agent.

Who Needs Homeowners Insurance?

Although it is not a legal requirement in Texas, every homeowner needs homeowners insurance to protect their investment and prevent unprecedented financial losses arising from covered perils like hail or fire, theft, or a liability claim from someone who is injured on your property. Between 5% and 35% of Texas housing is uninsured, depending on the county. That means that anywhere between 600,000 and over 4 million homes lack this important coverage.

Who Should Get Homeowners Insurance?

You should get Homeowners insurance if you have a home that you own, regardless of whether you have paid the mortgage off or not. If you have a mortgage, your lender will most likely require you to have homeowner insurance.

Homeowners interested in getting home insurance should consult with a knowledgeable state-licensed residential property insurance expert to get the homeowners insurance policy that will suit their needs.

PROs and CONs of Homeowners Insurance in TX

In Texas, homeowners insurance may have it’s PROs and CONs:

PROs of Homeowners Insurance

  • Provides financial relief: Homeowners insurance provides financial relief by covering the costs of damages caused by covered perils to your home, property or personal belongings

  • Protects your liabilities: Having homeowners insurance helps cover liabilities such as property damage or physical injury of a third party, where an accident that caused injury happens in your place (excluding intentional injuries), and you are legally responsible. It also covers any related court and legal costs for covered incidents in such a case.

  • Handles the cost of additional living expenses while your home is being repaired: Where you have to temporarily move out of your house due to repairs or reconstruction caused by perils listed in your insurance policy, homeowners insurance may cover the expenses incurred. However, this depends on the coverage of your policy.

  • Protects your investment: Homeowners insurance helps make sure your investment is protected in the event of a covered disaster or accident.

  • Helps maintain the upkeep of your home: With homeowners insurance, you do not have to worry about being able to afford to fix damages that may arise from covered perils because your insurance company will cover such repairs.

CONs of Homeowners Insurance

  • May be considered expensive: The premiums of homeowners insurance may be considered expensive for some people, especially for new homeowners who may be stretching their budget. The lower the deductibles, the higher the premium. The higher the insured value, the higher the premium.

  • Limited coverage: Homeowners insurance has a wide coverage, but it is still limited in some ways; for instance, it does not cover damages caused by earthquakes, floods, wear and tear, insects, termites, rats, etc. If you want additional protection, you must buy additional coverage.

  • Terms and conditions: Certain terms and conditions may warrant hidden extra costs that policyholders may not be aware of. Sometimes, these terms and conditions may be that financial coverage will only be provided based on certain terms. Homeowners are encouraged to read the terms and conditions of their insurance policies before purchasing them. Always read the Exclusions section first.

  • Processing claims may take some time: In some situations, processing claims may take longer than expected, especially in more complex cases. However, you can speed up the claims settlement process by providing enough details of the event that occurred. Do not leave out any information or provide misleading information. Putting out misleading or unclear information may prolong the claims process.

    (NOTE: Per Texas law, most homeowner insurers are required to pay out the claims within 45 days; otherwise, they must state the reason for the delay in writing. Exceptions to the deadlines may be provided if arson is suspected or if coverage was provided by the Surplus insurer or through the Texas Windstorm Insurance Association (TWIA).

Is Homeowners Insurance Worth Buying?

Yes, homeowners insurance is worth buying because of the protection it offers against financial losses arising from covered risks and perils.

What Happens if you don’t Have Homeowners Insurance in Texas?

If you don't have homeowners insurance and your home is damaged, you must cover the repairs out-of-pocket or seek financing options to do so. Most Texas roofs get replaced at least once every 10 years due to hail damage and not having homeowners insurance at least for this coverage may be a dangerous move.

Besides the obvious types of damage, not having homeowners insurance opens up the owner of the property to a host of various other issues too:

If you damage someone’s property, while it is within the bounds of your residence, and you do not have homeowners insurance, you are liable for those damages out of your own pocket.

If someone gets injured on your property and you do not have a homeowners policy with liability coverage, you will be liable to pay for the damages and medical bills out of pocket or risk being sued.

If your home is fully paid off, you may save several thousand dollars per year by not having the coverage, but eventually, some damage is bound to happen, which can significantly drain your savings. With the cost of repairs and rebuilding going up every year, the risk of not having the protection outweighs the possible savings.

Why is Homeowners Insurance Important?

Homeowners insurance helps you avoid unplanned expenses from repairs to your home caused by covered perils. Such unplanned expenses can disrupt other scheduled expenses. For example, you may have been planning a vacation for summer since the beginning of the year, and all of a sudden, there is a fire outbreak in your uninsured house. Unfortunately, you will then have to put your vacation plans on hold and use the money to repair your house instead. This could have been easily avoided if only you had homeowners insurance. Hence, it is necessary to get homeowners insurance to insure your home against perils like fire, theft, wind, vandalism, and many others.

What Happens When your Homeowners Insurance Lapses?

A lapse in your coverage means that your insurance coverage has expired, and you have become uninsured. A lapse could be as short as a few days and as long as a certain number of years. In both cases, the risks are the same, and in the event of a disastrous event that leads to the loss of properties or liabilities, you will not have any financial protection from homeowners insurance. Therefore, you can no longer file claims if a disaster occurs at your home, and you will have to pay the expenses incurred in such events out of pocket. When your homeowners insurance policy runs out, and you do not pay the required premiums or renew the policy, it could lead to a lapse.

It is advisable that homeowners avoid lapses in their homeowners insurance policies because getting back from lapses may be a bit challenging. Generally, insurance companies see homeowners with lapses in their insurance policies as a higher risk due to the period without insurance. This is because lapses make homeowners appear financially unstable or irresponsible. A homeowner insurance lapse also makes it look like the only reason for starting a new policy is to file a claim on a damage that has already occurred. Consult with a state-licensed insurance agent in Texas to get clarity on any questions about homeowners insurance and how it can help you avoid the lapse of coverage. However, you must try to avoid lapsing coverages.