In the state of Texas, there is no legal requirement to obtain homeowners insurance. However, most lenders require some form of homeowners coverage during the life of mortgage. This means that for the majority of homeowners who are still paying for their house, they need to have coverage. When trying to find a Texas homeowners insurance company, you need to visit a website. It also important to read the fine print and ask questions before accepting and purchasing a policy as well. The following is a brief guide on what to expect when reviewing a homeowners policy or quote.
Coverage in Texas homeowners insurance policies can be broken down:
Dwelling coverage refers the the physical home itself and tends to cover damages and complete destruction. There are however often many clauses to dwelling structure, which makes it imperative to be clear on what is and is not covered. Some policies may state full dwelling coverage, but have exceptions like flooding, which means freak floods would result in no payment for the dwelling at all.
Personal property refers to the contents of the home, such as clothes, computers, furniture and so forth. It can cover destruction and theft, though often has limits on how much is covered and requires documentation to be claimed.
Outer structure refers to aspects outside the home, such as gazebos, tool sheds, fences, and so forth. Other structure coverage can be especially helpful for rebuilding after a natural disaster or fire, so long as the policy covers these events.
Loss of use is a term that means the insurance company will assist in paying for a temporary residence while the home is being repaired after a covered event. Most companies have very specific stipulations for coverage in these instances. Typically they will have caps on how much or for how long they will assist with alternate living arrangements.
Personal liability coverage is paid to help assist with court defense. This is usually involved if someone is injured on your property and legal action is taken. Personal liability can help cover the court costs and provide a defense lawyer to help with the case.
Medical payment coverage is designed to help cover the medical expenses incurred by those injured on your property, or caused by your property away from home. Examples include: if a neighbor is over for a barbeque and accidentally burns themselves to the point of requiring medical treatment. Medical payment coverage would cover the cost. Another instance is if you have your dog at the park and it bites someone. Medical payments would help cover the cost of their medical treatment. Like all other types of coverage, medical payments tends to have a lot of limitations in how much they will pay and what for. It is important to have the company’s limitations lined out before purchasing Texas homeowners insurance from them.
Other key terms to be familiar with when selecting a Texas homeowners insurance:
Aside from the types and limitations of coverage, it is important to understand the difference between the broader types of policies. These refer to how things are defined and payed out through a policy. All Risk or comprehensive polices tend to get the broadest range of coverage and will cover any potential cause of damage unless specific exceptions are listed. Whereas other polices that are called Named Perils policies will only pay out for damages caused by very specific events. An example would be if you had a pipe burst and it flooded the basement. A comprehensive policy that covered flooding would not require it to be caused from a specific source, so the flood damage from the pipe would be covered. With a Named Perils policy, it may have flooding as a covered event but have the stipulation that it be flooding caused by weather, and therefore not cover the damages from the burst pipe.
There is also an important difference in how Texas homeowners insurance policies specify how they will pay. When the term “replacement cost” is applied, it means that the actual cost is to complete the repairs or replacement of the home. It can sometimes be higher or lower than the market value of the home because it does not consider the home in terms of real estate so much as normal property. The term “actual cash value” means that it will payout based on the market value. This means if you bought a $200,000 home that depreciated in value to $150,000 and was destroyed in a fire that was caused by a covered event, the payout would only be at the last noted cash or market value for the home. For some people this difference can be being able to rebuild or having to find a new home at less value than their old home.