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What is homeowners insurance?
A house represents the single largest investment most people will make, and it of course becomes much more than a mere investment. Carrying homeowners insurance won’t do anything to replace the personal loss of a house if something catastrophic happens. It can, at least, give Texas homeowners valuable financial protection so they can rebuild or rebuy.
Homeowners insurance policies normally come with both property and liability protections. Policies may extend coverage to a property, personal belongings, and the homeowners’ family.
Who in Texas should carry home insurance?
Most homeowners should carry home insurance, for few Texas residents could afford to replace their house without incurring a major financial loss. It’s also often required if a home is mortgaged.
What coverages are available through homeowners policies?
Homeowners policies usually come with multiple protections, which work together to protect the house, other structures, personal belongings, and the policyholder’s family. While exact coverage options can differ between policies, they often include protections such as:
Dwelling Replacement Cost Coverage: Normally covers the primary house against damage and destruction
Other Structures Coverage: Normally covers secondary structures, such as sheds, detached garages and barns, that are on a property
Loss of Use Coverage: Normally helps pay for different accommodations if a covered incident makes the insured home uninhabitable
Personal Property Coverage: Normally covers common personal belongings, such as furniture, clothes and dishes, against damage and loss
Scheduled Personal Property Coverage: Normally covers high-value belongings, such as electronics, collectibles, firearms and antiques
Personal Liability Coverage: Normally covers certain liability lawsuits that could be filed against a policyholder or their immediate family living with them
Underwriting Risk Factors Coverage: Normally ensures that premiums won’t be increased due to uncontrollable factors
How much dwelling coverage do homeowners policies provide?
Homeowners policies can provide one of several levels of dwelling coverage:
Forced-placement coverage is extremely limited, typically only covering up to the outstanding balance on a mortgage. Banks will purchase this coverage if the homeowner doesn’t maintain sufficient home insurance, and they’ll add the coverage’s cost onto the mortgage payment.
Actual cash value coverage is the most basic option for homeowners to purchase. It typically covers up to the fair market value of a home. This allows homeowners to recoup any equity they have, but it’s not necessarily enough to rebuild the house.
Replacement cost coverage typically provides enough to rebuild the house, even if the amount is more than the house is worth. The coverage might provide a certain percentage above a home’s value (sometimes “extended replacement cost,” or it might not put a maximum on the amount that can be paid (sometimes “guaranteed replacement cost”).
Replacement cost coverage is often recommended, as rebuilding a house can be much more costly than the house is worth. Material and labor costs rise over time. If a home is destroyed in a major natural disaster, both costs can spike if many buildings are destroyed.
Does home insurance include coverage for floods?
Flooding is normally excluded from standard home insurance policies, but any agent who knolls homeowners policies well can also help with flood insurance.
Flood insurance is available for qualifying properties at a subsidized rate, through the National Flood Insurance Program. It can be purchased on the private insurance market for properties that don’t fall within the NFIP regions.
An insurance agent who specializes in homeowners policies can check whether a particular property qualifies for the NFIP. They can help homeowners purchase policies through this program or on the private market.
How can Texas residents get homeowners insurance?
If you need help insuring a home that’s located in Texas, contact the independent insurance agents at First Step Insurance. Our agents will work closely with you to determine which coverages make sense for your home, and then we’ll show you homeowners insurance policies that have those coverages. With our help, you can have confidence that your home, your belongings, and yourself are protected well.
Reach out to our independent Texas insurance agents for quotes, questions, or any other needs!
This material is for informational purposes only. All statements herein are subject to the provisions, exclusions and conditions of the applicable policy, state and federal laws. For an actual description of coverage, terms and conditions, please refer to the applicable insurance policy or check with your insurance professional. The illustrations, instructions and principles contained in the material are general in scope and, to the best of our knowledge, current at the time of publication.