Homeowners insurance pays for repair or replacement costs of the policy holder’s house and personal property damaged or destroyed by any covered occurrence or event, a “covered loss” in the terminology of Texas insurance regulators. The Texas Consumer Bill of Rights regulates homeowners insurance policies. Insurers must provide copies of the Bill of Rights to their policy holders. In order to get the most out of you hard earned money, it will be worth looking for Homeowners insurance Texas here.
Texas homeowners insurance policies and what they cover:
Dwelling insurance pays for damage to or destruction of a house by a covered loss.
Personal property insurance pays for damage to and loss or destruction of household items.
Other structures insurance pays for repair or replacement of structures detached from the house — garages, sheds, fences, and the like.
Loss of use insurance pays for additional living expenses of temporary relocations caused by damage to a house from a covered loss. The policy pays such costs up to either a percentage (typically 10 to 20 percent) of the dwelling coverage or a specific time period (24 months as an example) after the covered loss.
Personal liability insurance pays to defend homeowners insurance policy holders against lawsuits and covers liability costs for personal injury or property damage.
Medical payments insurance pays the medical costs of persons injured on the property of the homeowners insurance policy holder.
Types of Policies Generally
The two general types of policies insurers offer in Texas:
All-risk, comprehensive, or open perils coverage policies that offer protection against all causes of loss except those specifically excluded.
Named or specified perils coverage policies that offer narrower protection and cover only the causes of loss specifically named.
Replacement Cost and Actual Cash Value
Replacement cost is different from market value and does not include the value of the land. Actual cash value is what the homeowner would pay to rebuild or replace the property minus depreciation or decrease in value due to age or wear and tear with use. If a covered loss destroys a homeowners insurance policy holder’s house, actual cash value coverage may not be enough for a complete replacement.
Homeowners Insurance Policy Coverage Limits
Insurers may exclude certain losses from coverage. Most homeowners insurance policies do not cover losses caused by earthquakes, flooding, or insects, losses to houses vacant for a specified number of days, to normal wear and tear, wind or hail damage to trees and shrubs, mold, or water damage from continuous seepage.
Homeowners Insurance Policy Dollar Limits
Dollar limits are maximum amounts insurers must pay for houses destroyed. The policy declarations page shows the dollar limits. For full payment for a partial loss, most insurers require coverage for at least 80 percent of replacement cost. Some may require 100 percent.
Personal Property Coverage
Texas homeowners insurance policies cover personal property as a percentage of the dwelling coverage limits. For example, at 40 percent of dwelling coverage of $100,000, the items are insured for up to $40,000. Homeowner policies usually cap coverage for personal property like jewelry and art. A typical homeowners insurance policy pays only the actual cash value of lost, damaged, or destroyed personal property.
Other Residential Property Policy Types
Renter insurance covers tenant personal property, legal liability for personal injury, and additional living expenses if a covered loss forces a temporary relocation. Like renter insurance, condominium insurance covers personal property, legal liability, and additional living expenses. It also covers damage to condo additions, alterations, and improvements. Townhouse insurance may be by either an individual homeowner policy or an association master policy, in which case a Texas tenant homeowner policy can insure personal property. Mobilowners insurance is an auto policy that covers mobile homes as residences. Mobilowners policies typically offer limited coverage.
Windstorm and Hail Insurance
Most homeowners insurance policies do not cover windstorm and hail damage in any of the 14 coastal counties or parts of Harris County on Galveston Bay. The Texas Windstorm Insurance Association is the state’s insurer for such coverage. When hurricanes enter the Gulf of Mexico, windstorm coverage becomes unavailable until the storms pass.
Texas homeowners insurance policies do not cover flood damage. For protection from losses caused by flooding, insurance from the National Flood Insurance Program under the Federal Emergency Management Agency is available. For properties in special flood hazard zones, lenders require flood insurance. A special flood hazard area has a 1-percent chance of flooding at any time. Some Gulf Coast residents must have flood insurance to purchase a windstorm and hail policy.
Insurers offer special policies to cover damage caused by earthquakes. The cost is low because earthquakes are rare in Texas.
Texas Insurance Regulations
Insurers file their rates with the state but need no official approval to charge them. Texas law requires reasonable rates for homeowners insurance not excessive for the risks covered and not unfairly discriminatory. If rates fail to meet these requirements, the state may require refunds to homeowners insurance policy holders overcharged.
Texas law sets deadlines for claim processing. Insurers must respond within 15 days after receipt of a homeowners insurance claim, accept or reject a claim within 15 days after submission of any documents requested, explain in writing reasons for rejection of a claim, and send the policy holder claimant a check or bank draft within five business days after agreeing to pay a claim.
An insurer that needs more time to make a decision on a claim can take up to 45 days by explaining the delay to the policy holder. An insurer that suspects arson has 30 days after receipt of required documentation to accept or reject the claim. An insurer that takes too long to pay is liable for 18 percent of the claim plus attorney fees if the homeowners insurance claimant sues and wins.