Homeowners Insurance

Homeowners insurance protects you from losses caused by storms, fire, theft, and other events outlined in your policy.
It is important to know whats in your policy. This publication gives you general information about homeowners
insurance, but it is not a substitute for the policy itself. Make sure you read your policy carefully and understand your
specific coverages. Its also important to know your rights. Texas has a Consumer Bill of Rights for homeowners and
renters insurance. Your company must send the Bill of Rights with your policy or renewal.

Dont wait until you have a claim to review your policy and to know your rights.

Texas Homeowners Policies

You can buy a dwelling policy that covers only the structure of your house. Or, like most Texans who own their homes,
you can buy a homeowners policy, which combines five different types of coverage:

Dwelling - pays for damage to your house and any outbuildings, such as detached garages and storage sheds.

Personal property - pays when household items, including furniture, clothing and appliances, are damaged, stolen, or

Liability - protects you against financial loss if you are found legally responsible for someone elses injury or property
damage. A homeowners policy automatically provides $25,000 in coverage. You can buy up to $1 million in coverage
for an extra premium.

Medical payments - pays medical bills for people hurt while on your property. It also pays for some injuries that happen
away from your home, such as your dog biting someone. A basic homeowners policy pays $500 in medical bills. You
can pay extra and get up to $5,000 in medical payments coverage.

Loss of use - pays living expenses if your home is too damaged to live in during repairs. The most common policy pays
up to 20 percent of the amount for which your house is insured.

Types of Homeowners Insurance Coverages

Companies can sell several types of policies in Texas, each with a different level of coverage.

HO-A policies provide extremely limited actual cash value coverage of your home and its contents. Only the types of
damage specifically listed in the policy are covered.
HO-A amended policies provide more extensive coverage than the base HO-A policy but less coverage than an HO-B.
HO-B policies provide replacement cost coverage for most types of damage, except those specifically excluded in the
HO-C policies provide the most extensive coverage, but are more expensive than other types of policies.
National policies are policies of national insurance organizations or large national companies that the Commissioner of
Insurance has approved for sale in Texas. Coverage provided by these policies may differ considerably from one
another and from the coverage provided in standard Texas homeowners policies.
Generally, HO-B policies provide the most coverage for the price, but some companies may not offer the HO-B policy.

What Homeowners Policies Do and Dont Cover

Most Policies Cover Losses Caused by
Fire and lightning Flooding
Damage by aircraft & vehicles Earthquakes
Vandalism and malicious mischief Termite damage
Theft Damage by insects, rats, or mice
Explosion Freezing pipes while your house is unoccupied (unless you turned off the water or heated the building)
Riot and civil commotion Wind or hail damage to trees and shrubs
Smoke damage Losses if your house is vacant for 60 days or more
Windstorm, hurricane, and hail Wear and tear or maintenance

Companies may exclude coverage for certain losses. For example, if you live on the Gulf Coast, you might receive an
endorsement that excludes coverage for wind and hail damage. In some areas with a history of hail storms, some
companies provide only actual cash value coverage for roofs instead of full replacement cost. Actual cash value pays
for damage minus depreciation on the roof, depending on its age and condition.

Most policies will not cover mold remediation beyond that necessary to repair or replace property damaged by a water
loss otherwise covered by the policy. The HO-A policy offers no coverage for mold remediation or for damage caused
by sudden and accidental water leaks, although some companies may offer that coverage as an endorsement to the
base HO-A policy. If you have an HO-B policy, you will be able to buy additional coverage in increments of 25 percent,
50 percent, and 100 percent of your policys limits to cover mold remediation. If you have questions or concerns about
how a mold claim is being handled, or you need information about how to minimize mold losses, ask your insurance
company for a set of guidelines regarding mold claims. If your company cannot provide you with a set of guidelines,
review TDIs publication, Effectively Handling Water-Damage and Mold Claims. The publication includes recommended
guidelines for companies and homeowners to ensure timely and efficient handling of mold claims. These guidelines are
only recommended, however. Your company may have different guidelines and procedures.

Note: If you have an HO-B policy that was bought or renewed before January 1, 2002, your policy may cover mold
remediation up to your policy limits without an added endorsement. Ask your agent or company whether your policy
covers mold remediation.

Other Policies

In addition to the Texas homeowners policy, there are other types of policies to protect you from losses to your

Renters: A landlords insurance does not cover a renters personal property. Renters insurance covers your
belongings, provides liability protection, and pays extra living expenses if a fire or other disaster forces you to move
temporarily from your rented home.
Condominiums: Condominium insurance matches the benefits of renters insurance, and also covers damage to
improvements, additions, and alterations to the condominium unit.
Townhouses: Townhouses may be insured by either an individual homeowners policy or an association master policy.
If a townhouse is owner-occupied and the townhouse association does not have a master policy on the building, you
can purchase a homeowners policy on your individual unit. If the association has a master policy, you should get a
Texas tenant homeowners policy to insure your personal property.
Mobile homes: Mobile homes without wheels and resting on blocks or a permanent foundation qualify for a
homeowners policy. However, most mobile homes are insured by a mobilowners policy. A mobilowners policy is an auto
policy that covers mobile homes used as residences. Mobilowners policies offer extremely limited coverage.
Farm and ranch owners: Farm and ranch owners policies insure homes outside city limits on land used for farming and
raising livestock. You can pay extra and get coverage for certain farm equipment and outbuildings.
Maintain Adequate Coverage

Buy enough coverage to avoid a major financial loss if you have a fire or other loss. This means keeping a realistic
dollar amount of coverage on your house.

Replacement Cost Coverage of Your House

Texas standard HO-B and HO-C policies provide replacement cost coverage for your house, up to your policys dollar
limits. Replacement cost is what you would pay to rebuild or repair your home, based on current construction costs.
Replacement cost is different from market value. It does not include the value of your land. If you are not sure of the
amount it would cost to rebuild your home, your company or agent usually has construction cost tables to help you
figure the cost.

To receive full payment (minus your deductible) for a partial loss, such as a hail-damaged roof, you must insure your
house for at least 80 percent of its replacement cost. If you insure your house for less than 80 percent of the full
replacement cost, the insurance company will pay only part of the expense of a partial loss.

Unless you buy an endorsement increasing your coverage, HO-A policies only provide actual cash value coverage.
Actual cash value is the replacement cost of your property minus depreciation.

Your Policys Dollar Limits are Important

If you insure your house for $100,000, thats the most you will get if it is destroyed, even if it would cost more to replace
it. The Declarations Page on the front of your policy shows how much coverage you have. Talk with your agent or
company representative if you have any questions about your insurance limits. If a fire destroys your home, Texas law
requires the insurance company to pay the full amount of the policy - even if this amount is more than the replacement

Dont wait until you have a claim to learn your policys limit.

Replacement Cost Coverage for Your Personal Property

Homeowners policies automatically cover household contents - furniture, clothes, appliances, etc. - up to 40 percent of
the amount your house is insured for. This means if you insure your house for $100,000, its contents are insured for
up to $40,000. You can get more coverage by paying a higher premium. This automatic coverage pays only the actual
cash value of damaged, stolen, or destroyed household goods. Actual cash value is an items replacement cost, minus

You may be able to pay extra and buy replacement cost coverage that ignores depreciation and pays for a new item
like the one you lost.

Replacement cost coverage gives you more protection than actual cash value coverage. The following example
illustrates why: A burglar steals your six-year-old television set. With actual cash value coverage, you get only what
you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company
pays to replace your TV with a new set similar to the stolen one.

Companies generally want proof you replaced an item before paying your claim in full. However, if you have an HO-B
policy, the company must advance you the first $1,500, plus the depreciated value of any other damaged property,
without requiring proof of replacement. After that, the company must pay you within five business days after receiving
proof you replaced, restored, or repaired the property. A company can offer to replace the items instead of paying
cash, but the choice is yours.

Inventory Your Property

Many people learn after a fire or storm that they didnt have enough personal property coverage. Making an inventory
will help you decide how much insurance you need. It also will simplify claims.

Your inventory should list each item, its value, and serial number. Photograph or videotape each room, including
closets, open drawers, storage buildings, and your garage. Keep receipts for major items in a fireproof place.

Homeowners insurance on certain items like jewelry and furs is limited. You may be able to buy more coverage for an
extra premium.

Other Types of Insurance You Might Need
Flood Insurance

Texas ranks at or near the top of the nation in weather-related property damage each year. A large portion of this
damage is due to flooding.

Homeowners policies do not cover flood damage. However, the National Flood Insurance Program (NFIP) offers flood
coverage in many areas. Local insurance agents sell NFIP flood policies and can tell you about the program in your

For more information, call NFIP at

If a lender determines that a property is in a special flood hazard area, the borrower is required to purchase flood
insurance. A special flood hazard area has a 1 percent chance of being inundated by flood.

Hurricanes and Windstorm Insurance

The Texas Windstorm Insurance Association (TWIA) is the states insurer of last resort for wind and hail coverage in
the 14 coastal counties and parts of Harris County on Galveston Bay. TWIA provides wind and hail coverage when
insurance companies exclude it from homeowners and other property policies sold to coastal residents. You can buy
TWIA coverage through local insurance agents if you need it.

When a hurricane enters the Gulf of Mexico (80 degrees longitude and 20 degrees latitude), you can no longer
change or purchase new Windstorm coverage.

If you plan to build, add to, or renovate a home or other structure and want TWIA coverage, you or your builder should
request an inspection by a TDI windstorm inspector or a Texas licensed professional engineer appointed by TDI. Your
agent can tell you how to get an inspection.