Homeowners insurance protects you financially if your home or property is damaged or destroyed by something your policy covers, like a fire or storm.
Texas has a Consumer Bill of Rights for homeowners and renters
insurance. Your insurance company will give you a copy of the Bill of
Rights when you get or renew a policy.

Is homeowners insurance required?

The law doesn’t require you to have homeowners insurance. But if you still owe money on your home, your lender will require you to have it. Even though it’s not legally required, homeowners insurance is a good idea because it helps protect your home and other assets.

Types of homeowners coverages

Homeowners policies combine several types of coverage into one policy. Most homeowners 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. Loss of use coverage pays your additional living expenses if you have to move while your house is being repaired. 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.

What risks does a homeowners policy cover?

Your homeowners 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: Most policies don’t cover:
Fire and lightning Flooding
Explosion Termites, insects, rats, or mice
Theft Losses that occur if your house is vacant for the number of days specified by your policy
Vandalism, malicious mischief, riot, and civil commotion Wear and tear
Aircraft and vehicles Earthquakes or earth movement
Windstorm, hurricane, and hail (but not if you live on the Gulf Coast) Wind or hail damage to trees and shrubs

Replacement cost vs. actual cash value coverage

Homeowners 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 your home or replace your property at current costs. For instance, say you bought a couch 10 years ago and paid $1,000 for it. If it’s destroyed in a fire, a replacement cost policy will pay you enough to buy a new couch like your old one, even if the cost is more than what you originally paid.
  • Actual cash value coverage pays replacement cost minus depreciation. Depreciation is a decrease in value because of wear and tear or age. For example, if your 10-year-old couch is destroyed in a fire, an actual cash value policy will pay you the value of a 10-year-old, used couch. It won’t pay to replace it with a new couch like the one you had.