A gentleman by the name of Scott called into our office the other day. He was looking to find a new home insurance carrier for his policy. Admittedly, the conversation started off pretty hot and became spicier as Scott attempted to explain his predicament. From what we could tell, he had an insurance claim for water damage denied by his current insurance provider. Which can happen. But as he got deeper into his story, he began to EMPHASIZE heavily to us that "ALL INSURANCE IS A SCAM"!
I'm sure that you can guess this was a really fun phone call for us. We understand that people come from all walks of life and have some really unique perspectives. We talk to a lot of great Texans who are happy to share their personal point of view with us, and we enjoy those conversations even if we don't agree with you. But claiming that we are insurance fraudsters is where we tend to draw the line.
True Texas Home Insurance is a real thing. While we do see legitimate claims be denied for various reasons, it is usually because a Texas homeowner doesn't have the correct home insurance coverages in place for their situation. That's when an insurance adjuster is put into a really tough spot. As your friendly Texas based independent insurance agents, we thought we tackle this concept of home insurance being a scam because we are hearing this more and more as insurance premiums continue to skyrocket.
What is Home Insurance?
While this may sound really boring, home insurance is a contractual form of financial protection for homeowners as it provides coverage for unforeseen events that may damage or destroy their property. These policies typically offer coverage for the structure of the home, personal belongings in the home, personal liability for the weird situations that come up. And most options for homeowners policies also include some addons for additional strange hazards that come surprise you.
It is important to note that home insurance is not solely a requirement imposed by mortgage companies. While lenders often require borrowers to have insurance to protect their investment, it is also a wise decision for homeowners to protect their most significant asset. Home insurance offers financial security and peace of mind, ensuring that unexpected events do not lead to devastating financial consequences.
Importance Of Having Home Insurance In Texas
If you've lived in Texas for any amount of time, you understand that the weather is a bit more than slightly unpredictable. We've seen gigantic wildfires in West Texas, Armageddon like hail storms in North Texas, and dramatic floods in Houston. It wasn't that long ago that every county in the state was frozen like a Thanksgiving turkey. And all of that has happened inside the last five years.
Most Texans aren't willing to spend $20,000 or more on a roof replacement from that hail storm or a full rebuild for a flood that can run into the hundreds of thousands. The water claims from the frozen pipes were tens of thousands in many instances. Who wants to hold cash to cover multiple instances of those happening to your Texas home?
Home insurance is of utmost importance in Texas due to these risks faced by homeowners. It serves as a protective shield for both the structure of a home and the valuable belongings contained within it. By having home insurance, individuals can safeguard their property against covered perils such as fire, hurricane, wind, hail, vandalism, and theft.
Beyond that, home insurance will include personal liability coverage. It is easy for Texans to understand the damage that can happen to the physical property that is their home. Liability protects homeowners and their families from legal responsibilities arising from injuries or property damage caused to others on their property. Do you really want to pay a lawyer to defend a claim made when someone falls at your home? Having the homeowners insurance company cover those expenses and provide a lawyer sounds like a much better proposition.
We understand that the topic of home insurance isn't necessarily exciting. But when you begin to think of all the ways that you could have legal costs or property repair costs, the concept of having a financial backstop to protect your future makes a world of sense.
Overview Of Texas Homeowners Insurance Policies
Texas homeowners insurance policies provide essential coverage for residents of the Lone Star State, offering financial protection in case of damage or loss to their homes and personal belongings. These policies not only safeguard the physical structure of a home but also provide liability coverage for injuries that may occur on the property. Homeowners insurance in Texas is particularly important due to the state's susceptibility to natural disasters such as hurricanes, tornadoes, and severe storms. Since a Texas home policy is a contract between you and your insurance company, what are some specific ways that it protects you?
One of the primary components of home insurance is protection for the structure of the house. This coverage pays for the repair or rebuilding of the home in case of damage caused by covered perils. Whether it's a fire that destroys a significant portion of the house or a powerful storm that damages the roof, the home insurance policy will help cover the costs of repairing or rebuilding the structure. The key is to know if you have only a set list of perils that it covers or if it is for any peril that may cause damage.
Additionally, home insurance also provides coverage for personal belongings. This includes items such as furniture, appliances, electronics, and clothing. Much like your structure, you need to understand whether it is a list of named perils that it covers or anything. But on many standard home policies, you may be seeing actual cash value rather than replacement cost. That can make a huge difference when getting a claim check.
Apart from structure and personal belongings coverage, home insurance typically includes liability coverage. This protects homeowners against legal costs and medical expenses in case someone gets injured on their property. If a visitor slips and falls or if a neighbor's child gets injured while playing in the insured home's backyard, the liability coverage will help cover the costs of medical bills or legal fees if a lawsuit is filed. And really, who wants to deal with these kinds of things?
So now that you have a brief overview of what home insurance actually is and what it does, the question becomes why do people think it is a scam. If your home insurance rates have gone up like ours, you are likely questioning what you're paying for. So let's dig into that whole scam thing next.
Why People Think Home Insurance Is A Scam!
The overarching reason that people believe that insurance is a scam is because of an insurance claim that goes horribly wrong. And when we say horribly wrong, we mean that the homeowner does not get the expected outcome from the company when they file a claim. This can be for one of two reasons.
Reason # 1: A Legitimate Claim Isn't Covered or Is Reduced
When we were discussing what home insurance is earlier in the article, we used very specific keywords. Remember that home insurance is a legal contract between you and the insurance company. If you select a homeowners policy with a short list of covered perils and your legitimate event is not on that list, you will not have coverage per the contract. This is where many people have become frustrated through the years.
Open Peril policies on the other hand will cover anything not included in the list of exclusions or conditions. Most people don't read these lists of conditions or exclusions to understand why a claim might be either denied or coverage limited from the total cost of the loss to the home. This can be especially infuriating with the current policy language being used for hail coverage.
Reason # 2: A Fraudulent Claim Is Filed
Most folks don't see some of the little things that may be said or done as fraudulent, but if a mis-statement is made it's a violation of good faith with the insurance company. Where we see this occur the most is with roof claims that are strong armed by what ends up being a fraudulent contractor trying to get a roof covered. It's not uncommon to make inflated insurance claims in an attempt to get higher payouts. Or maybe they indicate that old damage should be considered with a current situation which is not right. This can leave the average consumer seething when they are confronted with the affects after the denial.
Why Texas Home Insurance Isn't A Scam
Unsuspecting homeowners can become frustrated if a claim is denied or a payout is greatly reduced. With the homeowners insurance options dwindling as companies have left Texas over the last 24 months, it can feel like everyone is out to screw the good people of Texas. The property insurance crisis has exacerbated this with the changes of policy terms, absurd premium increases, and increasing deductibles. It is easy to see why many are now feeling like home insurance feels like a scam.
But please remember that the insurance industry in Texas is regulated by the state's insurance department. There are very specific rules and regulations that ensures that they operate within the boundaries of the law to protect Texas homeowners. These regulations help provide you and your neighbors with some peace of mind, knowing that they have certain protections in place.
Insurance Policies Are Contracts
When we boil it all down, we have to remember that home insurance policies are simply contracts between a homeowner and an insurance company. In the event of a covered loss accounted for in the policy language, policyholders can file a claim with their insurance company and receive compensation for the damages they have incurred. This financial support allows homeowners to rebuild or repair their properties and replace belongings that may have been damaged or destroyed. It all comes down to what's written or implied by the policy.
If you aren't sure what your policy says or does, the independent insurance agents at Insurance For Texans are here to help you understand. True Texas Home Insurance is designed to provide Texas homeowners a base level of coverage for your home that is easy to understand. We work for Texas families and not some giant insurance company. Click the button below to get True Texas Home Insurance for yourself. Or call us at 469.789.0220 to speak with us now.