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Texas Homeowners Insurance Claims

With nearly 12 million residential properties in Texas insurance companies pay out a lot of claims. In 2020 alone, insurers paid out nearly $6 billion in direct losses and legal fees for Texas homeowners insurance claims. Texas is home to the most hail storms in the US, resulting in frequent roof hail damage. The most common claims involve damage from: Wind, Hail, Water, and Fire.

Filing homeowners insurance claims generally involves the following steps:

  • Inform your insurance provider of the incident and submit a claim. Your claim must provide a detailed description of the property damage and the damage to your personal possessions. It must also include evidence of the estimated value of loss incurred and it must exceed your coverage limits

  • The company will investigate your claims and assess your covered losses comparing them to the homeowners insurance coverage that was in place at the time of the event

  • After the assessment, the insurer will either approve, reject, or modify the amount to pay for your claims

Do not let damage spread untreated. File your claim as soon as possible.
Do not let damage spread untreated. File your claim as soon as possible.

What are the Types of Homeowners Insurance Claims in Texas?

Homeowners insurance claims can be filed for Property Damage and for Liability.
Property Damage Claims
Property Damage claims can be filed for damages to the home itself, personal belongings, other structures on the property. The insured items can be either repaired or replaced. Additional living expenses coverage, which pays the cost to rent temporary housing and get food, is part of the property damage claim.
Personal Liability Claims
Personal Liability claims are filed when property damage and/or bodily injury is caused to someone other than the owners of the home while on the insured property. Liability claims are typically filed to cover medical expenses, repair the damage to the property, replace the unrepairable property, and to cover the costs of the resulting legal fees. Personal liability claims also include pet insurance, where the damage caused by your pet is covered by homeowners insurance.

What are the Most Common Homeowners Insurance Claims?

The most common homeowners insurance claims in Texas stem from wind, water, and fire damages.

  • Wind claims include damage caused by the wind itself, hail damage to the roof and sides, and any other object that may be forced onto your home by the wind - for example a fallen tree.
  • Water claims for homeowners insurance can be of 2 main types: FLOOD and NON-FLOOD. While leaks and other non-flood water claims can be filed under most homeowners insurance policies, flood claims require a separate hazard insurance, which is purchased and claimed through the Federal Emergency Management Agency’s National Flood Insurance Program (NFIP).
  • Fire claims represent a quarter of all residential dwelling coverage claims. (Note: Lightning strike homeowners insurance claims usually fall under fire and/or power surge damage).

How Do I File a Claim for Homeowners Insurance?

In Texas, to file a claim for your home insurance, it is best to consult with the licensed property insurance agent through whom you purchased the policy. You may also contact your insurer directly and speak with their (captive) agent. The agent will guide you through the whole process of filing a claim, or better still, file it for you. Speak with a knowledgeable agent who can answer detailed homeowners insurance questions.
While the process varies according to the type of claim and the insurance company involved, your agent will do the following:

  1. Review your policy to be sure the event necessitating the claim is a covered loss
  2. Inform the insurance company on your behalf and handle all communications with your insurer's claims department through emails and phone calls, ensuring that all communication is documented.
  3. File the paperwork for your claim by obtaining, completing and submitting the required paperwork. Typically, the insurer will provide the claims forms.

How Long Do I Have to File a Homeowners Insurance Claim in Texas?

The Texas Department of Insurance (TDI) encourages filing a claim with your insurer immediately after the occurrence of a covered peril. This helps the insurance company make the most accurate assessment of the loss, process your claim on time, and pay out your claim as early as possible. Most home insurance companies in Texas require claims to be submitted within a year of the incident, not later.

What Happens after I File a Claim with my Homeowners Insurance in Texas?

Per Chapter 542 of the Insurance Code, your insurance company must write to acknowledge receipt of a claim within 15 days of filing it. Once acknowledged, the insurer's claims adjuster will investigate and assess your claims. The company must conclude their findings and settle your claims within 45 days of receiving your request.
Based on the insurance adjuster's findings and report, the company will either accept, decline, or modify the value to pay out. If your request is rejected, your insurer must communicate the reasons in writing within 15 days after their investigation. If the payment is delayed, you have the right to sue the company for the claim sum plus interest, as well as attorney's fees.
Consult with a Texas-licensed residential property insurance agent before filing homeowners insurance claims. An agent understands the claims filing process and will help you avoid pitfalls that may delay payouts or lead to outright rejection of claims.

How Do Homeowners Insurance Companies Pay Out Claims in Texas?

As soon as your homeowners insurance company in Texas agrees to pay your claims, the payout check will be mailed to you within five business days. If you have a mortgage, the check will be issued to you and your mortgage lender. Typically, you must endorse the check and mail it to your lender, who pays the money into an escrow account for disbursement. Once payment has been made, you can agree on how the funds will be released to the contractor selected to carry out repairs on your property or replacements of damaged personal possessions.

Can a Homeowners Insurance Company Refuse to Pay a Claim?

Yes, a homeowners insurance company in Texas can refuse to pay a claim. For instance, your insurer may refuse to pay a filed claim if it suspects fraud or is not satisfied with the assessment report and needs more time to investigate. On the issue of fraud, the insurance company will engage an independent assessor to investigate and either confirm or strike out the company's suspicions. If the investigation reveals no fraud, the company is bound by the policy contract to pay out the claim.
Your homeowners liability coverage protects you against claims that arise from injury or accidents to others on your insured property, even if the injury was caused by your negligence. It is an all-purpose liability policy that covers liability claims against you generally, except for boating and car accidents. Before paying liability claims, the insurer must conduct a thorough investigation. Failure to do so is seen as a breach of duty. However, the insurer will not pay if it is legally proven that the injury or loss was intentionally inflicted by you or the person involved.
As for claims involving medical bills, your homeowners liability coverage will cover claims for any injury to others in your home or on your property. Homeowners liability coverage does not cover claims for medical expenses arising from injury to you or family members living in your home.
It is not unusual for insurance companies in Texas to negotiate the payout amount with the insured during claims assessment. Make sure to solicit the help of a licensed property insurance agent or an attorney experienced in property insurance before agreeing to the intended payout amount.

Why Do Homeowners Insurance Companies Deny Insurance Claims?

In Texas, a homeowners insurance company can deny your claims for the following reasons:

  1. Suspicion of fraud or any kind of foul play, such as arson
  2. Damage caused by the insured’s negligence.
  3. When the peril leading to the damage is not covered by your policy, such as flood damage. (Note: Flood insurance is a separate policy from basic homeowners coverage)
  4. If your policy has lapsed due to non-payment of premiums

What are the Top Reasons a Homeowners Insurance Claim Might Be Denied for Payment in Texas?

The top reasons a homeowners insurance policy claim in Texas may be denied include:

  • suspected fraud
  • non-payment of premiums
  • when the peril is not covered by your homeowners insurance policy e.g flood damage. You need a separate flood insurance policy to cover flooding.

Top Reasons Insurance Companies Deny Fire Claims

How Much Does Homeowners Insurance Pay Out?

Several factors influence the amount homeowners insurance pays out in Texas. Your home’s valuation, its contents, and liability protection coverage needs are the most essential of these variables.
Your insurer can use any of the following methods to value your home:

  1. Appraised Valuation - Valuation of property based on a value determined by an appraiser
  2. Fair Market Valuation - Valuation of property based on the average sales price of similar properties in your neighborhood
  3. Tax Assessed Valuation - Valuation based on the reported value of your home in your property tax file. The figure is usually lower than the property's fair market price
  4. Rebuild Valuation - This is typically the best valuation method. In this case, your home’s valuation is derived by calculating how much it would cost to rebuild it from the ground up at the current market prices
    How much your insurer will eventually pay out as your claim depends on the agreed value of your home. If your policy contract is based on the fair market value of your home, your homeowners insurance will provide coverage exactly up to that amount. For your personal belongings in the house, the amount paid is determined by the assessed value.
    Based on the agreed valuation, there are two homeowners coverage options to determine how much an insurer pays for claims in Texas. These are the replacement value and actual cash value options:
  • Replacement Value: This represents how much it would cost to replace your personal property at the current market price when your claim is paid.
  • Actual Cash Value: The actual amount left after depreciation has been deducted from the current value of your personal property.
    Consequently, if your homeowners insurance covers the loss of personal property based on actual cash value, that is how much you will be paid and it will not suffice to replace your property. To be fully protected, it is usually best to make sure your policy includes replacement cost coverage to meet most of your home insurance needs.
    Additional living expense coverage (also known as the Loss of Use) pays for such items as: a temporary rental home or a hotel, utilities, and other household costs like pet boarding, increase in meal costs, etc. Typical Texas homeowners insurance covers Loss of Use up to 20% of the whole property coverage face value. For example, a home with a dwelling coverage limit of $100,000 will have loss of use coverage of $20,000. $1 million home - $200,000, and so on.
    Liability claim payouts are based on the liability coverage limits that were purchased by the “at-fault” homeowner. The limit is reset per each occurrence. For example, if person A slips and falls on the property and then person B slips and falls next to them, both are covered per each occurrence up to the liability limit. The most commonly purchased personal liability claim limit for homeowners insurance coverage in Texas is $100,000 - $300,000 per each occurrence (depending on the insured’s combined needs).
    Speak with a personal property coverage professional to discuss home valuation, establishing the needed liability coverage limit high enough to financially protect your family, and to discuss how it all affects your home insurance costs.

What if my Insurance isn’t Paying Enough for my Claim?

Considering that insurance claims in Texas are often paid by checks, signing the check issued by your homeowners insurance company implies that you agree to the claim payout. If you are dissatisfied with the amount your insurer wrote in the check, it is advisable not to sign the check. Rather, contact them to express your dissatisfaction and contact your licensed agent to engage them further for possible redress.
You may also hire a private claims adjuster to reassess your claims and submit a new proposal to your insurance provider. If you hire a private adjuster to handle your negotiations, a percentage of the final claim value will be paid as the charge for their services. This will reduce your net payout. Your home insurance coverage provider should pay the amount specified in your proof, as long as you can offer tangible evidence of the value of any repairs done to your home and property.
If your insurer still refuses to pay the specified amount, lodge a complaint against the company with the Texas Department of Insurance via their complaint portal or (800) 252-3439. You can take it a step further and sue your insurer if you feel cheated by the amount they insist on paying. To get legal help with your insurance claim, discuss it with a trusted and experienced property damage lawyer near you or use the platform provided by TDI

How Long Can a Homeowners Insurance Company Investigate a Claim in Texas?

A homeowners insurance company has 15 days to investigate a claim request in Texas (§§ 542.001 — 542.014; §§ 542.051 — 542.061). If the peril that necessitated the claim is a severe disaster, the deadline can be extended. Where the company needs more time to investigate, it may take up to 45 days before accepting or rejecting a claim. If the company suspects fraud such as arson, it has 30 days to communicate its acceptance or rejection of a claim. In each of these cases, the insurer must communicate the reason(s) for the extension to the insured in writing. If an insurance provider fails to communicate within the stipulated periods, the insured has the right to sue the insurer.

How Can I Check the Status of my Homeowners Insurance Claim?

You can take the following steps to check the progress of your homeowners insurance claim in Texas:

  • Contact your property insurance agent to engage your insurer on claims status or
  • Contact your insurer's claims department directly. In Texas, customers can check the progress of filed insurance claims via dedicated phone lines, mobile apps, or websites provided by the insurance providers.

Do I Need to Tell Homeowners Insurance Company if I am Staying in a Hotel Due to Renovations at my Home?

Yes. If your home is being renovated following the occurrence of a covered loss, you will probably need to find a temporary living space, most likely a hotel. Your insurer will be accountable for your living and hotel expenses during this period. In Texas, most home insurance policies include loss of usage (Additional living expense) coverage which obligates the insurer to cover your living expenses in such a situation as this. So, in case of a covered loss it is necessary to inform your homeowners insurance provider of the situation.

When not to File a Homeowners Insurance Claim

You should study your homeowners insurance policy document thoroughly to understand your coverage before filing a claim. This will also help you not to exceed your coverage limits. You generally should not file a homeowner insurance claim in Texas under the following situations:

  • When the peril leading to loss or damage is not covered by your insurance policy. For instance, in Texas, your homeowner's insurance does not cover flooding. You will need to get a separate flood insurance policy from the National Flood Insurance Program (NFIP) to cover damages caused by flooding.
  • When the property's replacement cost or cost of repair is almost the same or lower than your deductible. For instance, if you need $500 to fix the situation and your deductible is $1,000, you have to pay out of pocket as opposed to an $8,000 worth of repair, for which you should file a claim. (Note: Even if you decide to repair the damage out of pocket, without involving the insurer, let them know what got fixed so that the coverage reflects the current value for the condition of the home.) However, choosing a policy with a higher deductible reduces the cost of your policy through lower premiums.
  • When the damage only requires little maintenance. For instance, minor plumbing repairs or replacements can be taken care of out of pocket
  • If you consistently filed claims in the recent past, especially in the last three years, you may want to refrain from filing another one without true need. If you file a claim in such a situation, your homeowner insurance provider may increase your premium by up to 20%. Insurers generally consider policyholders who have a history of filing claims as high-risk clients
    Before you file a homeowners insurance claim, make sure to speak with a Texas-licensed property insurance agent or a property damage lawyer who is experienced in property insurance law. An agent can assess the level of property damage or loss relative to your deductible and other variables and advise you accordingly. On the other hand, your insurance attorney can discuss insurance settlements and any other possible legal actions in connection to your Texas homeowners insurance claim.