Five Key Areas For True Texas Home Insurance
The Basics For Home Insurance
Every home insurance policy has three basic elements:
- Property Coverage for both your dwelling and contents
- Liability Coverage
- Deductible Amounts due from you if you make a claim
Once those three items are put in place, there is a bevy of options that can be added or subtracted to your insurance policy. On top of that, most major home insurance companies have packages that they like to leverage to get you to what they will claim is a great spot for coverage. But the devil is in the details as they say. The home insurance companies are continually coming up with new and creative ways to either deny or limit what they will pay for when you need them most. What is a Texan to do?
Insurance For Texans has come up with five key areas to focus upon to make sure that your policy is there for you when you need it most:
- Extended Replacement Cost
- Personal Property Replacement Cost
- Comprehensive Water Coverage
- Roof Replacement Cost
- Lower Deductibles
Let's dive into what these five terms mean to you!
Extended Replacement Cost
The dwelling coverage on your home is determined by an estimated replacement cost of construction. That's to say that if you had to rebuild your entire home from the ground up, how much money would be needed. The word "estimated" is used in this process since the value is constantly changing due to the differing price of materials and labor. However, the estimator's job is to find a reasonable value that will replace your home even with these fluctuations. So the balancing act of making sure that you have enough money to rebuild yet not over-estimating it so high that you can't afford your insurance premium is a real concern. But what happens when the price of materials spikes like it did early in 2021?
Fortunately, home insurance policies have various provisions to account for these large swings. Extended Replacement Cost is a coverage that is available on most home policies that will cover cost over-runs in a rebuild up to a certain amount of money if the dwelling coverage isn't truly enough to rebuild. The amount available varies from as little as 10% of the dwelling coverage all the way up to Guaranteed Replacement Cost no matter what happens. Insurance For Texans recommends that you leverage at least 50% Extended Replacement Cost whenever it's offered. The reality for most insurance companies is that this coverage costs pennies a day and will insure that your home can be rebuilt even when prices spike as we've seen in the last twelve months.
Personal Property Replacement Cost
Personal Property is all of the things that you move into your home when you buy it. One of the most overlooked items on a Texas home insurance policy is how you will be reimbursed for your possessions in the event that they damaged or destroyed by a claim. Many agents will offer "actual cash value" rather than "replacement cost" in an attempt to save you a few dollars. This can create a nightmare for you later on.
As technology continues to accelerate its development, the electronic items in our homes depreciate faster than new cars driving off the lot. When it comes time to make a claim for the tree that blew over and damaged your home and the TV on the other side of the wall, you could be left with a check for $100 and a swift kick in the shin while trying to replace that fancy three-year-old TV set. Selecting Replacement Cost as your claim settlement of choice on your personal property will allow you to replace that TV and continue watching your favorite media.
Comprehensive Water Coverage
In reality, there is no such thing as "full water coverage" on a Texas home insurance policy. However, that doesn't mean that every single policy has the same water coverage included. Almost all Texas home insurance policies include coverage for "sudden and accidental" ruptures of pipes or appliances. How much they cover in dollar amounts to make repairs is open to a discrepancy. Some policies only offer limited amounts of this coverage such as $5,000 to $10,000, while others may cover you up to the full dwelling value. Quite a stark difference. Having some is better than none, but knowing that if your hot water heater was to spill thousands of gallons of water into your home you could actually restore your home to its original state is fairly important. But water coverage on your home policy doesn't stop with just sudden and accidental coverage. Let's look at what line items are needed with respect to water coverage to make sure that you have TRUE Texas Home Insurance.
Home Insurance policy holders with Insurance For Texans are recommended to carry the following line items to make sure that they have the most robust water coverage available:
- Water Back-Up or Sewer & Drain Back-Up
- Foundation Water Coverage
- Slow Leak of Slab Leak Coverage
Water Back-Up, also known as Sewer & Drain Back-Up, protects your home if the sewer line that runs from your foundation to the sewer main in the street becomes clogged or impacted and backs up into your bathroom or kitchen. Sounds disgusting, right? Well, it is. This particular line item will allow the right people to clean the situation up so that you don't have to when it all goes horribly wrong. This coverage is optional, so a lot of agents like to leave it off.
In Texas, shifting foundations tend to be a constant. The soils composition here makes it common place for your home to need piers installed under the foundation to level it out. When this happens, the probability of slow leaks in the plumbing in the foundation goes up exponentially due to the leveling process. Foundation Water Coverage is an optional coverage that will allow the access to those leaks through the concrete foundation so that the repairs can be made without it costing you a fortune out of pocket.
A tandem line item to the foundation water coverage is what is known as Slow Leak or Slab Leak coverage. Those same slow leaks that occur due to the leveling of foundations can require you to have slow leak coverage. It is definitely not sudden and accidental, so this optional coverage allows your plumbing to be repaired in the event the situation strikes your home. This coverage is often included in tandem with that Foundation Water coverage that we mentioned, but it extends beyond the foundation. The "slow leak" portion can apply to P Traps underneath sinks or even to condensation drip pans in attics if they begin to drip over time causing rot, mold, and destruction. This makes it a home-run type of coverage.
Roof Replacement Cost
As the population of Texas has exploded, so have the number of hail claims on home insurance policies. The costs of those claims have made premiums explode as well which has caused many Texas homeowners grief. One of the ways that Texas Home Insurance companies have decided to help keep premiums down is to pay fewer or smaller claims. They are doing this by using a claim settlement process on roofs that we used to call actual cash value. Most smart Texans know this is a bad idea, so the insurance companies decided they needed to change the name of it. So in a slick marketing gimmick, they coined the phrase "Scheduled Roof Payment" to pay you a percentage of the roof's replacement cost based on how long ago the roof was installed on your home. 😱
This means if your roof is seven to 15 years old, they are only going to pay your for 50% to 70% of the actual cost to replace your roof in a claim situation. That means after you pay your deductible, and they knock that percentage off, the home insurance company will only give you a check for a few thousand dollars to repair your $15,000 roof on your home. Friends, this isn't Texan at all. It's criminal is what it is, and that's why True Texan Home Insurance always recommends that you have Replacement Cost on your roof.
Remember when we said that the goal of Texas Home Insurance companies was to pay fewer or smaller claims? Well, the other dirty trick that they are using to pay smaller claims is for you to have larger and larger deductibles. The deductible is the amount of money that you are required by law to pay against the total cost of the claim. It doesn't take a genius to determine that the larger the deductible, the less money the insurance company will give you to repair your home. It also doesn't take a genius to determine that that means that more money is coming out of your pocket even if they did keep your premium somewhat lower.
So what is a Texan to do? Some parts of Texas do have requirements on wind, hail, or hurricane deductible minimum amounts. If you live in Galveston, you simply cannot obtain a deductible for hurricanes or wind storms of $500. However, you can make sure that those amounts are kept as low as possible! If the lowest available deductible is 2% of your dwelling value, moving to 3% or 5% is a risky trade-off. That means that your financial responsibility in a claim is going to be thousands more and you will likely only save a few hundred on your premium at best! Here are some guidelines on what is available today.
- North Texas (DFW area) - Wind & Hail deductibles at 1% of dwelling value are still available!
- Coastal Areas - Wind & Hail or Hurricane deductibles are typically never lower than 2% of the dwelling value
- The Rest of Texas - If your Wind & Hail deductible is above 1%, you do not have True Texas Home Insurance
- For any claims that are not wind or storm-related, you can have a different amount that can be customized to your needs
Frankly, this is where the internet-based call center insurance agencies can really mess you up big time. Working with a Texas-based, independent insurance agency like Insurance For Texans can make a world of difference as we know the ins and outs of True Texas Home Insurance.
What Can I Do?
Friends and neighbors, these are the five key components to True Texas Home Insurance. You can take our quiz to find out how you stack up. If you would like a consultation with one of our agents, or if you're ready to get started with making sure that you have True Texas Home Insurance, click the button below!