SterlingResidential.com | Buying & Selling Residential Properties in Texas | Houses for Rent Houston Area | Humble Atascocita Kingwood & Spring Texas Realtors | Sterling Residential®, Realtors® | Real Estate Broker: About Homeowner Insurance

Getting to Know Your Homeowner Insurance
Texas homeowners endure tornados, hail, and hurricanes —- catastrophic weather resulting in expensive water-related claims. In fact, water-related claims make up a significant portion of dollars paid out to Texas homeowners.

Insurance premiums are also driven by housing prices —- property values are higher than ever. Construction and labor costs are up. Houses are built larger with more rooms and amenities.

These factors contribute to high insurance premiums, and Texas insurance rates rank among the highest in the nation. Your insurance premiums will add significant costs to your monthly housing debt, so stretching your insurance dollar is more important than ever.

How Do Insurers Access Risk and Price Insurance?
Premiums are based on risk. Insurers measure that risk by factoring the home’s age, value, location, proximity to hazards, construction costs, fire protection, your claims history, and your credit score into the premium calculations. You can lower your premiums by reducing the risk to the insurer —- and sharing some of the risk yourself.

When Do I Shop for Insurance Coverage?
Start shopping early and shop with several insurers to make comparisons in cost and coverage. Texas buyers are wise to shop during the option period and evaluate the insurability of the home before the right to terminate the purchase contract expires. Existing policy holders should shop in advance of their renewal date to avoid any loss of coverage that may occur when changing carriers.

The Texas Department of Insurance website lists companies selling insurance in Texas. Visit the site and you can find information about insurance coverage and costs. Get quotes from several companies before you buy, and include independent agents in your search —- some agents only represent a single company, or company group, and independent agents may represent several companies.

How can I lower the cost of homeowner’s Insurance?
When you are shopping, ask your insurance agent about discounts. Shoppers can often lower premiums by consolidating coverage with one company. You can also reduce your premiums by opting for higher deductibles. Insurance companies may review your credit and insurance history, so keeping your credit clean and reducing claims will help you with lower insurance costs.

Additional discounts may be offered when you improve or upgrade your home, like adding impact-resistant roofing or burglar and fire detection systems. Heating, plumbing, and electrical system upgrades may also reduce your premiums.

What is a CLUE Report and How is it Evaluated by Insurers?
The CLUE report is the Comprehensive Loss Underwriting Exchange (CLUE) report —- a history for insurance property claims for homes and insurance applicants. Insurers use the CLUE report to access the risk of writing coverage for your home. The report gives the insurer the history of claims against the property, but insurers also use the report to evaluate home buyers.

What Does the Homeowner Policy Cover in Texas?
Homeowner policies protect against theft, fire, storm or other losses by providing insurance coverage for your home, personal property, liability, and medical expenses. If you suffer a loss and your home is not habitable, your homeowner insurance may cover temporary housing expenses.

Texas insurers sell HO-A, HO-B, and HO-C policies with various coverage levels. HO-A policies cover your home for actual cash value and can be amended to cover replacement value. HO-B or HO-C policies offer more extensive coverage levels in turn for higher premiums.

Mold Coverage is No Longer Included in Basic HO Policies
Mold coverage was eliminated from basic HO policies a few years ago and is only available with upgraded coverage for an additional premium.

What Other Type of Insurance May I Need?

Additional Liability
The basic homeowner policy includes limited coverage for liability or financial losses related injuries or property damages. The basic level offered is for $25,000 and homeowners can purchase additional coverage for an additional premium.

Home Business Coverage
Your homeowner policy may not cover you for losses related to operation of a home-based business. Ask your agent about coverage and you may want to inquire about a business liability policy to cover the additional risk associated with running a business out of your home.

Extra Coverage (Endorsements)
Homeowner insurance coverage on special items like jewelry and furs is limited. For an extra premium, you may be able to buy endorsements that expand or increase the coverage on items like jewelry, furs, fine arts, camera equipment, gun collections, coin or stamp collections, computer equipment, and radio and television satellite dishes and antennas or other specialty items or valuables.

Renters, Condominium & Townhouse Coverage
Landlords do not insure building contents, and Renter’s insurance covers your personal belongings. Condominium coverage adds coverage for additions or upgrades you make to the property. Townhouse policies are similar to condominium coverage and is designed to cover property not insured by the owner’s association.

Flood Insurance
Extensive weather-related property damages ranks Texas among the highest in claims each year. Much of the damage is flood-related as anyone living in the Houston metropolitan area knows. Homeowner policies do not cover flood damage, but the federal government offers flood insurance in many communities through the National Flood Insurance Program (NFIP).

As the designated flood insurance program, the NFIP maps Special Flood Hazard Areas (SFHA’s). Homes located within a SFHA are required to purchase flood insurance if the home is being purchased through a federally-regulated or federally-insured lender. When financing or refinancing a home purchase, there is no waiting period. In other instances, a 30-day waiting period may apply and you should check with your agent for details.

If you live in the Houston metropolitan area, it’s prudent to consider flood insurance even if your home doesn’t fall within a SFHA. Each year, 25% of claims occur in low or moderate risk areas and, during the flooding events related to Tropical Storm Allison, thousands of homes were flooded in areas not located within an existing SFHA.

Hurricanes and Windstorm Insurance
Insurance companies in 14 Texas coastal area counties exclude hail and windstorm coverage from homeowner policies. For coastal area residents, protecting your property from Hurricanes and other severe weather requires coverage from the Texas Windstorm Insurance Association (TWIA). The TWIA is the ‘insurer of last resort’ for wind and hail coverage in the 14 coastal counties including: Aransas Galveston Matagorda Brazoria Nueces Calhoun Jefferson Refugio Cameron Kenedy San Patricio Chambers Kleberg Willacy and parts of Harris County and Galveston Bay.

What do Texas Homeowners need to know about Windstorm Coverage?
Insurance agents sell TWIA coverage until a hurricane enters the Gulf of Mexico. Once a hurricane has entered the Gulf of Mexico, new policies are not issued until the threat has passed. The TWIA website summarizes the application procedure or you can contact your insurance agent for information and eligibility requirements.

Are you building or renovating a home in coastal Texas? Eligibility for windstorm and hail coverage may require an inspection. If you 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.

I Have Coverage —- Now What?
Stay informed and review your coverage each year. Get to know your coverage levels and deductibles and understand what’s covered and how to process a claim. Know whether your policy includes cash value or replacement value —- cash value only pays the depreciated value of your property and may significantly reduce the amount of money you’ll recover from a loss. Understanding your deductibles and coverage limits makes sure your property is protected.

Keeping your home maintained is important —- well maintained homes suffer fewer losses. When you make upgrades or improvements to your home, consult with your agent to see if you qualify for discounts. Adjust your coverage to include new purchases or remodeling by reviewing your replacement value annually.

Make sure your personal property is accounted for —- keep track of purchases and adjust your coverage levels as necessary. Remember to extend your coverage or purchase endorsements for items excluded from your standard policy. Inventory your personal property and make a list of model numbers and serial numbers. Photographs or video of your property is helpful. Store your inventory and receipts in a safe place —- like a fireproof safe or safety deposit box.

When you do suffer loss or damage, consider handling small losses yourself. Your Texas insurer cannot drop you because of weather-related claims, but other claims can affect your coverage. Three non-weather related claims within three years may affect your renewal.