Home Insurance

Homeowners insurance protects your home and belongings from damage or loss, and can also cover liability if someone gets hurt. It covers dwelling, personal property, liability, and additional living expenses. Coverage includes repairs, replacement of damaged items, liability for injuries, and additional living expenses for unlivable homes due to covered events.

Property Protection

Home insurance covers the structure of your home against perils like fire, theft, and natural disasters. It ensures that your investment and sanctuary are safeguarded from unexpected events.

Belongings Coverage

Your personal belongings hold sentimental and financial value. Home insurance extends protection to your possessions, whether they're inside your home or temporarily elsewhere.

Liability Security

Accidents can happen on your property. Home insurance provides liability coverage in case someone is injured or their property is damaged.

OVERVIEW

SCOPE of COVERAGE

Types of home insurance coverages

Home policies combine several types of coverage into one policy. Most home policies in Texas include these six coverages:

  1. Dwelling coverage pays if your house is damaged or destroyed by something your policy covers.
  2. Personal property coverage pays if your furniture, clothing, and other things you own are stolen, damaged, or destroyed.
  3. Other structures coverage pays to repair structures on your property that aren’t attached to your house. This includes detached garages, storage sheds, and fences.
  4. Additional living expenses coverage pays if you have to move while your house is being repaired to fix damages your policy covers. Additional living expenses include rent, food, and other costs you wouldn’t have if you were still in your home.
  5. Personal liability coverage pays medical bills, lost wages, and other costs for people that you’re legally responsible for injuring. It also pays if you’re responsible for damaging someone else’s property. It also pays your court costs if you’re sued because of an accident.
  6. Medical payments coverage pays the medical bills of people hurt on your property. It also pays for some injuries that happen away from your home – if your dog bites someone at the park, for instance.

Replacement cost vs. actual cash value coverage

Home policies provide either replacement cost coverage or actual cash value coverage. To be fully protected, make sure your policy has replacement cost coverage.

  • Replacement cost coverage pays to repair or replace your house and personal property at current prices. For example, say you bought a new roof 10 years ago and the current price for a new roof is $10,000. If you have to replace your entire roof after a storm, a replacement cost policy would pay for a new roof at today’s prices. If you have a $2,000 deductible, your company would pay $8,000.
  • Actual cash value coverage pays replacement cost minus depreciation. Depreciation is a decrease in value because of wear and age. In the same example of the 10-year-old roof, the actual cash value might be $7,000. After your $2,000 deductible, your company would pay $5,000. You’d have to pay the rest of the cost of the new roof yourself. This means your total out-of-pocket costs for an actual cash value policy would be $5,000, compared with $2,000 for a replacement cost policy.

What risks does a home policy cover?

Your home policy protects you against different risks, or perils. Risks and perils are things that could damage your house or property. This table shows common risks that most policies do and don’t cover. Coverages vary by company. Read your policy or talk to your agent to be sure of your exact coverages.

Most policies cover damages from:Most policies don’t cover damages from:Fire and lightningFloodingSudden and accidental release of water or smokeA continuous water leak; policies also won’t cover mold removal, except to repair damage caused by a covered riskExplosionTermites, insects, rats, or miceTheftLosses that occur if your house is vacant for the number of days specified by your policyVandalism, malicious mischief, riot, and civil commotionWear and tearAircraft and vehiclesEarthquakes or earth movementWindstorm, hurricane, and hail (but not if you live on the Gulf Coast)Wind or hail to trees and shrubs

Homeowners insurance policies have specific exclusions—conditions or events that are not covered by a standard policy. Here are some common exclusions:

  • Flooding: Homeowners insurance does not cover water damage caused by natural flooding, rain, sewer line or sump pump backups, or water that seeps up from the ground and damages your home’s foundation. Burst pipes or a defunct water heater would be covered, though.
  • Earth movements: This refers to damage caused by earthquakes, land shock waves, volcanic eruptions, landslides, mudslides, and other ground shifts. However, fire or explosion damage resulting from earth movement is usually covered.
  • Pest infestations: Damage caused by animals (such as rats, termites, bees, bats, or bed bugs) is generally not covered, except under rare circumstances.
  • Mold or wet rot: Homeowners insurance excludes damage related to mold growth or wet rot.
  • Certain dog breeds: Some policies exclude liability coverage for specific dog breeds with a history of aggression.
  • Wear and tear or neglect: Damage due to normal wear and tear or lack of maintenance is typically not covered.
  • Power surges caused by utility companies: While power surges from other sources may be covered, those caused by utility companies are often excluded.
  • Home-based business liability: If you run a business from home, liability related to it may not be covered.
  • Local building ordinance or law: Costs associated with complying with local building codes or laws are often excluded.
  • Intentional damage: Damage caused intentionally is not covered.
  • Nuclear hazards, war, and government action: These are typically excluded as well.

Setting your rates

Insurance companies use a process called underwriting to decide whether to sell you a policy and how much to charge you. The amount you pay for insurance is called a premium. Each company’s underwriting rules are different. This means one company might be willing to sell you a policy, even if another company isn’t. It also means that different companies charge different rates.

Most companies consider these things when deciding on your premium:

  • Your home’s age and condition. Companies can’t turn you down just because of your home’s age or value, but they can charge you more.
  • Your home’s replacement cost. Houses with higher replacement costs have higher premiums.
  • Construction materials. Premiums are higher for houses built completely of wood. They’re lower for houses built of brick or stone.
  • Where you live. Premiums are higher in areas that have more storms or crime.
  • Availability of local fire protection. Premiums are lower for houses that are close to fire stations.
  • Your claims history. Your premiums might be higher if you’ve had claims in the past.
  • Your credit score. Some companies use your credit score to decide what to charge you. Your premiums will be lower if you have good credit. A company can’t turn you down based only on your credit, however. To find out which companies use credit scores, visit HelpInsure.com.

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