Home insurance is a package policy. It is a legal contract between you and the insurance company that provides financial protection to repair or replace your dwelling, detached structures, and personal belongings after a covered loss. It also serves as a critical safety net for your bank account by covering legal liability for accidents on your property and paying for temporary housing if a disaster forces your family out of the house.
Six Coverage Types for Home Owners
Home insurance is considered a package policy, where several different types of coverage are all bundled into one policy. Standard Texas home insurance (typically an HO-3 or HO-5 form) is broken down into these core parts:
- Coverage A: Dwelling: covers the structure of your house itself, plus anything permanently attached to it, like your garage, deck, or even your built-in appliances. If a tornado rips through and takes your roof, Coverage A is what pays to put a new one on.
- Coverage B: Other Structures: covers items a detached garage, a shed, or a fence. These structures aren’t part of the dwelling, so they fall under Coverage B. Usually, it is limited to 10% of your Dwelling coverage.
- Coverage C: Personal Property: covers the stuff inside your house like your clothes, furniture, electronics, and that expensive grill on the patio. Pro Tip: In Texas, most standard policies only pay the actual cash value (depreciated price) for your stuff unless you specifically upgrade to replacement cost coverage.
- Coverage D: Loss of Use: If a covered peril makes your home uninhabitable, coverage D pays for your hotel stays and the extra cost of eating out while your home is being repaired. It helps you maintain your standard of living when you're displaced.
- Coverage E: Personal Liability: protects your bank account if you are sued because someone got hurt on your property (like a slip-and-fall) or if you accidentally damage someone else’s property. It also pays your legal defense fees associated with the claim.
- Coverage F: Medical Payments: no-fault coverage for small medical bills if a guest has a minor injury at your home. It’s designed to settle things quickly, potentially preventing a lawsuit.
The Hailstorm in Haltom City
Mark is a homeowner in Haltom City and thought that having home insurance meant that he was fully covered for anything that could happen to his house. When a massive hailstorm battered his neighborhood, his roof was totaled, his detached shed was dented, and his patio furniture was shredded.
When Mark called his agent, he was relieved to find out his coverage A handled the roof and coverage B took care of the shed. However, he hit a snag with his patio furniture. Because he hadn't upgraded his coverage C to replacement cost, the insurance company only paid him what the 5-year-old furniture was worth today. It wasn't enough to buy a new set.
How Are Perils Covered?
In Texas, there are two main ways your home is protected from perils (causes of loss):
- Named Perils: Your policy only covers a specific list of events (like fire, lightning, or theft). If it’s not on the list, it’s not covered.
- Open Perils: It covers everything except for a few specific exclusions like floods, earthquakes, or wear-and-tear. Most Texas policies use open perils for the house (coverage A) but only named perils for your stuff (coverage C) unless you upgrade.
Home Coverage Exclusions
Even the best home insurance has limits. In Texas, two major things are never included in a standard home policy:
- Flood Insurance: If a creek rises or a storm surge hits, your home policy won't pay for the repairs associated with flood damage. You need a separate flood policy for that.
- Maintenance Issues: Insurance is for sudden and accidental events. It won't pay to fix a roof that just wore out because it was 30 years old.
Build Custom Coverage for Your Home
Your home is unique, and your insurance should be too. Don't settle for a cookie-cutter home insurance policy that leaves your detached workshop or your expensive jewelry exposed.
Is your home truly protected? Most Texans don't realize they have gaps in their coverage until the adjusters show up. Our personalized risk assessment looks at your specific property and your stuff to ensure all six pillars of your policy are rock-solid.