Frequently Asked Questions about Texas Homeowners Insurance

Here are the answers to the most commonly asked questions about Texas homeowners insurance. Learn what home insurance coverage is and how insurers determine premiums.

What is Texas homeowners insurance?

Homeowners coverage is a form of property insurance that protects the structure of a home and the personal belongings kept in it. Texas home insurance also has a liability component that will provide for your legal defense and any damages if a member of your household injures someone or damages another person's property. Typically, homeowners insurance also reimburses policyholders for the living expenses they incur while their homes are being repaired after experiencing a covered loss.

How do insurers determine Texas house insurance premiums?

Insurers base Texas homeowners insurance premiums on the risk the policyholder and location of the dwelling represent. The risk policyholders represent is usually determined by their claims history and the claims history of the house. The risk the actual dwelling represents is calculated according to the claims frequency of the ZIP code in which the house is located. Your insurer will examine the number of thefts in your area as well as the likelihood your home will suffer weather damage.

How do Texas home insurance rates compare with those of the rest of the country?

According to the Insurance Information Institute (III), Texas consistently ranks first in the U.S. for homeowners premiums. Texas frequently experiences severe weather, such as powerful winds, tornadoes, hail, etc., which makes insuring homes in the state very risky for insurers. To offset this risk, insurers charge more for Texas homeowners insurance than they do for coverage in other states. Even within the state of Texas, premiums can vary widely depending on your location.

What amount of coverage should I select?

The purpose of a Texas homeowners insurance policy is to pay for the replacement cost of your home in the event of a loss. Insurance experts advise homeowners to choose a policy that covers at least 80% of the total replacement cost of the home. You should not choose the amount of your policy based on your home's real estate value, as this may be less or more than what it would cost to rebuild your home from scratch. Similarly, the real estate value of the home includes the cost of the land on which it is built, which would not need to be repaired or replaced after a loss. For this reason, the real estate value of a home often inflates the true replacement cost.

What if I can't qualify for a Texas homeowners insurance policy?

If traditional insurers classify you as too high of a risk to offer coverage, you can pursue high-risk coverage through your state's underwriting association. Most states have what is called a FAIR plan for homeowners who cannot obtain homeowners insurance through traditional means. Contact the Texas department of insurance for more information.