Why Do I Need Insurance for my Home in Texas?

You need home insurance because you must protect your property from possible risks. If you own a home, you must protect your investment (regardless if you live in it or rent it out - even more so if you rent it out, because renters will likely not take care of the property as well as you).

If you are a landlord - then the type of policy you need for your home(s) depends on if it's a condo, single house, duplex, or - you may need commercial insurance for an apartment complex.

If you are a renter - you need to protect your personal property by obtaining a renter insurance policy since renters are not totally covered by homeowner or landlord insurance policies.

How Does Home Insurance Help in Texas?

Home Insurance is a kind of property insurance that protects a homeowner from losses caused to a personal residence, including the furniture and other contents within the home. Sometimes home insurance provides coverage against accidents that occur on the property.

Home insurance primarily protects the dwelling place, ensuring that homeowners are covered from property damage losses. However, homeowners also receive coverage for all contents eligible for coverage within the home. For example, insurance companies take inventory of electrical appliances, items of furniture, or other properties inside of the house that are eligible for coverage under the home insurance policy. Homeowners with adequate home insurance also get liability coverage for when someone may get injured on their property.

During repairs or incidents that force homeowners out of their homes, home insurance coverage can effectively cover the cost incurred on hotel, food, and other travel expenses.

Homeowners with insurance on their condos can also get coverage on several detached aspects of the home. For example, garages, sheds, fences, pet houses, and swimming pools are sometimes covered up to 10% by home insurance.

Landlords benefit from home insurance in cases of damages that arise from accidents and natural crises like tornados.

On the other hand, home insurance policies that landlords and homeowners normally get do not fit renters. Renters need a renters insurance policy. Such policy covers personal properties in the rental property, liability from medical bills that can arise from a person injured on the rental property, or any additional living expenses like hotel bills that a renter can incur if their rental property is temporarily damaged.

Let us examine the specific benefits of home insurance to homeowners, condo owners, and renters alike:

HOMEOWNERS Insurance

Home Insurance typically safeguards you against the financial losses that are caused by home or property destruction. With appropriate homeowners insurance, you can feel secure against thefts, natural occurring disasters, and other causes that can damage your home. In Texas, homeowners insurance would typically offer you:

• coverage to the structure of your home,

• coverage to detached structures within your home environments like fences,

• coverage to your personal properties contained in the building,

• coverage against legal or medical bills that can arise if someone gets injured on your property,

• And coverage if you have to leave your home temporarily due to repairs.

CONDO Insurance

Condo insurance in Texas typically gives protection to the condo unit and the personal properties contained within. Condo insurance also covers the extra expenses you can incur during repairs of the condo.

LANDLORD Insurance

This insurance coverage is targeted at providing coverage to landlords against damages and financial losses that can be caused by tenants or certain weather damage. The landlord insurance policy also offers coverage to properties owned by the landlord within the rental property. (NOTE: Apartment complexes are covered by commercial property insurance.

RENTERS Insurance

In Texas, renters typically have to take a type of insurance policy called Renters insurance policy since the homeowner's insurance, and the landlord's insurance do not directly cover the renters. Renters insurance typically covers the renter's personal property, provides medical and legal coverage against persons injured on your property, and any additional living expenses caused by temporary relocations due to repairs of the rental property.

NOTE: During short-term rentals, renters may be covered under the property's home insurance, as long as the owners paid for the extra coverage.

When Do you Need Home Insurance in Texas?

Broadly, home insurance is essential to both owners of properties and tenants alike. Home insurance usually combines one or more types of coverages into one. For example, in Texas, home insurance policies typically include six coverages:

• Dwelling coverage covers losses caused by destructions or damages as included in the insurance policy.

• Personal Property coverage covers damages to personal property contained within the home.

• Other structural coverage protects against losses to structures not directly attached to the home, like garages, storage sheds, fences, and pools.

• Loss of use coverage to cover for financial costs caused during temporary relocations from home. Some include hotel bills and feeding costs as stipulated in the insurance policy.

• Personal liability coverage to cater to medical bills, lost wages, and other costs arising from injuries on the property.

• Medical payments coverage to specifically take care of the medical bills of persons hurt on your property.

Homeowners need home insurance coverage when they own residential property, regardless of whether they live in it or not. Home insurance (Homeowners, Condo, or Commercial property) - all protect the investment of the property owners.

If the property owner rents the place to tenants, this now Landlord should get a Landlord insurance policy, which protects them from possible liability claims from the tenants.

The renter should protect their belongings from such risks as fire or theft using Renters coverage.

Broadly, the Texas Department of Insurance advises getting home insurance to protect against damages to a home caused by any of the following:

• Fire outbreaks.

• Lightning and thunderstorms.

• Explosion - Gas, Canister, etc.

• Theft, vandalism, riots, and commotions caused by civil unrest.

• Aircraft and vehicles.

• Windstorms, hurricanes, and Hail storms - depending on your location.

On the other hand, Texas home insurance policies typically do not offer protection against the following:

• Floods - The Federal Emergency Management Agency handles insurance against floods under the National Flood Insurance Program (NFIP).

• Wind and hail - For residents of Texas that reside on the gulf coast, most insurance companies do not provide coverage against wind and hail. The Texas Windstorm Insurance Association (TWIA) is responsible for catering to customers who need this insurance.

• The mold that results from water damage caused by water leakages.

• Degradation of properties caused by termites, insects, rodents, or other destructive animals.

• Normal wear and tear resulting from use or age

• Earthquakes

Do you Need Home Insurance to:

GET a MORTGAGE

No. Technically, you are not required to get home insurance to get a mortgage in Texas. However, Texan laws stipulate that a bank lender can insist on home insurance on a mortgaged home. The bank lender cannot request insurance coverage that exceeds the value of replacing the home and your personal belongings within. The laws also require bank lenders to consider the home's fair market value when asking for insurance coverage.

BUY a HOUSE

No. In Texas, you are allowed to buy a home without insurance. However, entities with a financial interest in the home like bank lenders or home equity lenders can require home insurance to access the loan. Bank lenders can also insist on active flood insurance policies obtained from the Federal Emergency Management Agency when an applicant applies for a loan to buy a house in a flood-prone area.

SELL a HOUSE

No, there are no home insurance requirements to sell a house in Texas. However, it is wise to maintain home insurance until the sale of the house is complete.

REFINANCE

Yes, Before you can refinance a mortgage, there has to have been a pre-existing mortgage and an active homeowners insurance.

Typically, during the refinance process, the homeowner contacts the existing insurer, updates the lender's info, and shows proof of the switch to the new lender.

TO RENT

Texan laws do not make home insurance policies compulsory for renters. However, landlords can insist that a tenant gets a renter insurance policy. NOTE: Landlord's insurance policy would not cover the tenant's personal property. Thus, tenants are advised to get a renters insurance policy.

What Home Insurance Do I Need in Texas?

While there are no blanket criteria to determine the type of home insurance you should get, several factors can determine the home insurance policy you should get. Typically the kind of home insurance you should get would be influenced by the following factors:

• The type of home

• The value of personal property contained in the home

• The geographical location of the home

• Prevailing weather conditions within the area where the home is located

• The prevalence of naturally occurring disasters around the location of the home.

Discuss your insurance needs only with a qualified state-licensed insurance agent, who can advise on the possible coverage options based on your particular needs.

What Kind of Home Insurance Coverage Do I Need?

Depending on whether you are a homeowner or renter, there are slight differences in the type of home insurance coverage you may need. Let's examine the different home insurance protections available to homeowners, condo owners or renters, landlords, and renters.

DWELLING Coverage:

Dwelling coverage protects against financial losses that arise from the damages to the house you own or live in. The dwelling coverage protects the house frame, roof, and walls. In some cases, dwelling coverage covers all appliances, electrical, or plumbing fixtures contained in the home.

• Homeowners insurance - Dwelling coverages are available under homeowner insurance. However, routine wear and tear of the house frame and dwelling might be exempt from the dwelling coverage.

• Condo insurance - Dwelling coverage is available to persons that buy condo insurance. However, according to the Texas Insurance Department, condo insurance only covers the interior aspects of the home instead of the entirety of the home structure.

• Landlord Insurance - Dwelling coverage is available to persons with landlord insurance. Dwelling coverages for persons with landlord insurance cover both the home's exterior and the properties the landlord deposited for the renters to use.

• Renter insurance - In texas, renters insurance does not offer dwelling coverage to renters. Thus as a renter, you must ensure that your landlord has the appropriate insurance to protect you from losses caused by damages to the home.

OTHER STRUCTURE Coverage:

This coverage covers the cost of repairs to structures that are not attached to the main home structure but is contained within the home premises. For example, fences, pet houses, swimming pools, and garages are all covered under this other structures coverage.

• Homeowners insurance - Homeowner insurance policies include other structures coverage in Texas.

• Condo insurance - Since condo insurance typically only protects the interior of a condo, holders of condo insurance must make an extra request for coverage of other structures within the premises of the condo.

• Landlord Insurance - Holders of landlord insurance also enjoy coverage of detached structures found within the home premises.

• Renter insurance - In texas, renters insurance does not offer coverage to detach structures found within the premises of the rental property.

PERSONAL PROPERTY coverage:

Personal property coverage is protection for the personal belongings owned within the home. Electrical appliances, furniture, and clothing are covered under certain insurance policies.

Personal property coverage in Texas is broadly categorized into two:

• Replacement cost coverage, and

• Actual cash value coverage.

Replacement cost coverage is considered the amount it would cost to replace the personal properties at the time an insurance policyholder makes a claim. Actual cash value on the other hand considers the value of the home minus depreciation.

PERSONAL LIABILITY Coverage:

Personal Liability Coverage is typically included in certain insurance policies to protect holders from the financial and legal liabilities that would arise if you are found guilty of causing the injury of a person on your property. Personal liability coverage differs based on the insurance policy:

• Homeowners insurance - owners of Homeowner insurance policies enjoy the full benefits of personal liability coverage in Texas.

• Condo insurance - Similar to holders of homeowners insurance policies, condo insurance policyholders enjoy the full benefits of personal liability coverage.

• Landlord Insurance - Holders of landlord insurance enjoy the benefits of the personal liability coverage if a renter is injured on the property due to reasons that were directly or indirectly caused by the landlord.

• Renter insurance - On the other hand holders of the renter's insurance policy would only enjoy coverage when a guest of the renter is injured on the property.

In Texas, residents and citizens are also encouraged to get an umbrella insurance policy to protect them from unforeseen accidents or injuries that can occur within and outside the home. Umbrella insurance policies are beneficial because they do not only provide personal liability insurance to personal properties but also provide coverage for several other circumstances as stipulated in the insurance policy.

LOSS OF USE Coverage:

This insurance coverage protects insurance policyholders against the additional expenses that would be incurred when the home is temporarily unavailable due to repairs. Policyholders of Homeowners Insurance, Condo Insurance, and Renter insurance in Texas typically get the loss of use coverage during repairs and temporary exits. On the other hand, policyholders of the Landlord Insurance can make claims for the monetary rent equivalent with the insurance policy if the renter is forced to evacuate a rental property due to natural disasters.

MEDICAL PAYMENT Coverage:

Medical payment coverage strictly covers the financial losses that can arise when a guest is injured on the insurance holder's property. Insurance policyholders of Homeowners Insurance, Condo Insurance, Landlord insurance, or Renter insurance provide similar benefits under this coverage.

Additional Coverage:

Depending on the policy held by an insurance policyholder, there might be a need to get specific additional coverage. In Texas you may need additional insurance for the following:

• Jewelry, fine arts, or expensive electronics and gadgets.

• Sewers or drains.

• Home foundations or slabs.

• Additional construction or repair costs required to meet local building codes and standards.

• Extra construction costs that arise outside of the existing insurance policy.

• Extra charges caused by the removal of mold.

• All damages caused by earthquakes.

Make sure to discuss your needs with a state-licensed insurance professional who can assess the needs and make professional recommendations.

NATURAL DISASTER COVERAGE:

Natural disasters refer to catastrophic events that have geological, atmospheric, or hydrological reasons that deal damage to property, and upset the environment. Some natural disasters include droughts, earthquakes. Broadly natural disasters are not covered under most insurance plans in Texas and coverage against natural disasters has to be separately procured.

FLOOD

Flood insurance is a necessity if your home is situated in a flood-prone area within Texas. Flood insurance is administered by the Federal Emergency Management Agency in accordance with the National Flood Insurance Program. Flood insurance typically covers the building and the contents in the building. In Texas, there is a network of more than 50 insurance companies, including the NFIP Direct, that cater to the flood insurance needs of entities in flood-prone areas within the state.

HURRICANE

To protect against hurricanes, residents of Texas can purchase insurance policies against wind and hail. For residents of Texas that reside on the gulf coast, most insurance companies do not provide coverage against wind and hail. However, the Texas Windstorm Insurance Association (TWIA) is solely in charge of catering to customers and dispensing insurance policies relevant to persons who need this insurance. Coverage provided against hurricane, wind, and hail by TWIA covers residential and commercial buildings. TWIA also offers coverage for detached structures found within the premises of the home, like fences, swimming pools, flagpoles, etc. To qualify for this insurance plan the applicant and the property must meet the following criteria:

• The property must be located in the areas designated by the commissioner of insurance including the 14-coastal Texas Counties - (Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy) and parts of Harris County east of Highway 146.

• Applicants must have been rejected by at least one other insurer that actively underwrites wind and hail coverage.

• The property must be certified by the Texas Department of Insurance.

• The building must possess no damage and must be in good condition.

TORNADO

Depending on the geographical area where the home is located, ordinary Homeowners' Insurance, Condo Insurance, Landlord Insurance or Renter insurance in Texas can protect against the damages caused by a tornado. However, if the home is in areas designated to be coastal areas, insurance can be procured from the Texas Windstorm Insurance Association (TWIA).

EARTHQUAKE

Most insurance policies exclude coverage from earthquakes in Texas. However, you can negotiate with your insurance provider to protect your home structure, personal property, additional living expenses, or detached structures within the home premises. In Texas insurance against events like earthquakes is broadly referred to as endorsement or policy add-ons. You can contact the Texas Department of Insurance customer care helpline on phone at (800)252-3439 to inquire about the most reliable insurance companies that offer earthquake policy add-ons. It is also important to note that this insurance plan only covers damage directly resulting from the earthquake. Other unintended consequences of the earthquake might not be covered under this insurance policy.