HOMEOWNERS & RENTERS

Your home is one of the biggest investments that you ought to protect. Home owners’ insurance coverage pays to repair or replace your house and personal property if they’re damaged or destroyed by an event or occurrence covered by your policy. Choosing the right coverage for your home can be a cumbersome task. Fortunately, our dedicated staff is well equipped to sort through the maze and find you coverage tailored to your needs.

Most homeowners’ policies in Texas include the following coverages:

Dwelling pays if your house is damaged or destroyed by a covered loss.
Personal property pays if the items in your house (such as furniture, clothing, and appliances) are damaged, stolen, or destroyed.
Other structures pays to repair or rebuild structures not attached to your house, such as detached garages, storage sheds, and fences.
Loss of use pays your additional living expenses (housing, food, and other essential expenses) if you have to temporarily move because of damage to your house from a covered loss. Your policy will pay either a percentage of the amount of your dwelling coverage (typically 10 to 20 percent) or for a specific period after the loss (such as 24 months).
Personal liability pays to defend you in court (up to the policy limits) against lawsuits and provides coverage if you are found legally responsible for someone else’s injury or property damage.
Medical payments pays the medical bills of people hurt on your property. It might also pay for some injuries that happen away from your home, such as your dog biting someone at the park. A basic homeowners’ policy pays $500 in medical bills, but you may buy up to $5,000 in medical payments coverage.

What you need to know about Homeowners’ Policies

All-risk policies (also known as a comprehensive coverage or open perils coverage). These policies offer you broad protection and cover all causes of loss unless the policy specifically excludes them.
Named perils policies (also known as specified perils coverage). These policies offer narrower protection than an all-risk policy and cover only the causes of loss specifically named in the policy.
Replacement cost is what you would pay to rebuild or repair your home, based on current construction costs. Replacement cost is different from market value and doesn’t include the value of your land. Ask your company if you aren’t sure how much it would cost to rebuild your house.
Actual cash value is what you would pay to rebuild or replace your property minus depreciation. Depreciation is a decrease in value due to wear and tear or age. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild.

Types of Homeowners’ Policies.

The most common Homeowners’ policies in Texas include the following:

HOA: Basic Named Perils Policy
The HOA Home Policy is the most basic and simple home insurance protection. The HOA policy will only protect you from 10 specific perils. (A peril is an event or disaster that causes a loss or damage to your home or property. A few of the most common perils are fire, theft, wind and hail).
If something happens to your home other than the ten perils found below, you are not covered under the HOA.

Fire or Lightning
Windstorm or Hail
Explosion
Riot or Civil Commotion
Aircraft
Vehicles (unless caused by the insured)
Smoke
Vandalism or Malicious Mischief
Theft
Volcanic Eruption

HOA+: Broad Named Perils Policy
The HOA+ Home Policy provides broader coverage than the standard HOA policy. Like the HOA, the HOA+ still lists every peril you are protected from, but the list adds six more perils. The 16 listed perils are:

Fire or Lightning
Windstorm or Hail
Explosion
Riot or Civil Commotion
Aircraft
Vehicles
Smoke
Vandalism or Malicious Mischief
Theft
Volcanic Eruption
Falling Objects
Weight of Ice, Snow, or Sleet
Accidental Discharge or Overflow of Water or Stream
Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
Freezing
Sudden & Accidental Damage from Artificially Generated Electric Current

HOB: Basic Open Perils Policy
The HOB Home Policy is referred to as an open perils policy. That means instead of specifically listing the only perils you are protected from like the HOA or the HOA+, the HOB lists the perils your policy WON’T cover. If a peril isn’t listed as being excluded, your home is protected. The HOB home policy provides protection that is much broader than an HOA or HOA+ policy. It is most similar to the HO3 policy (see HO3, below) but with a slight advantage: An HOB policy typically includes additional water damage protection, such as damage resulting from slow, repeated leakage and sewer backup, which are things that an HO3 doesn’t automatically include.

With the HOB, your home and possessions are protected from the same 16 perils that are listed in the HOA+ policy, as well as all other perils, excluding the following:

Earth Movement
Ordinance or Law (Some Coverage May Be Provided)
Water Damage (Some Coverage May Be Provided)
Power Failure
Neglect
War
Nuclear Hazard
Intentional Loss
Government Action
Mechanical Breakdown
Collapse (Some Coverage May Be Provided)
Mold, Fungus, or Wet Rot (Some Coverage May Be Provided)
Smog, Rust & Corrosion
Smoke from Agricultural Smudging & Industrial Operations
Dispersal, Discharge, Seepage of Pollutants
Animals Own by Insured
Birds, Vermin, Rodents, Insects
Wear & Tear, Deterioration
Settling, Shrinking, Bulging or Expanding (of Bulkheads, Foundations, Pavement, Patios, Footings, Floors, Roofs, Ceilings)

HO3: Basic Open Perils Policy
The HO3 Home Policy is a hybrid of an open perils policy and a named perils policy. Should you have a loss, this policy covers damage to your dwelling, unless the cause of loss is one of the explicitly excluded events listed below. In addition, your personal property will be covered for the same 16 perils covered by the HOA+ policy.
The exclusions to this policy’s dwelling protection are:

Earth Movement
Ordinance or Law (Some Coverage May Be Provided)
Water Damage Caused by Slow Seepage (Sudden & Accidental Water Damage Is Automatically Included)
Power Failure
Neglect
War
Nuclear Hazard
Intentional Loss
Government Action
Collapse (Some Coverage May Be Provided)
Mold, Fungus, or Wet Rot (Some Coverage May Be Provided)
Birds, Vermin, Rodents, Insects
Wear & Tear, Deterioration

The only real difference between the HO3 and the HOB homeowners’ insurance policy is the type of water protection that comes standard with the policy. As you can see from exclusion 3 above, Water Damage caused by continual & repeated seepage is normally excluded from HO3 homeowners’ insurance policies.

Three types of water damage can be endorsed (added back) to your policy. They are:

Water Backup: Protects against water damage resulting if there is a sewer system backup and water pours out of your toilets and sinks.
Foundation Coverage: Repairs your foundation if it has to be destroyed in order to fix a water problem in or under your foundation. This is typically only an important coverage if you would have to tear up the foundation to get to pipes, as you would with a slab foundation.
Continual & Repeated Seepage: Protects against water damage resulting from a slow leak somewhere in the home.

Most HO3 policies include Sudden & Accidental Discharge of Water coverage automatically, but not water backup, foundation coverage or repeated seepage. Most HOB policies, however, include Sudden & Accidental Discharge of Water, Water Backup and Foundation Coverage automatically. Some even include Continual & Repeated Seepage. Not all HOB policies are equal, so feel free to ask us for clarification on which types of water damage protection are included in your HOB policy.

HOC: Full Open Perils Policy
The HOC Home Policy is full open perils on both the dwelling and contents. The only significant difference between the HOC and the HOB is that the HOC will cover your possessions for open perils, while the HOB covers your possessions for the specific 16 perils listed above in the HOA+ policy.

RENTERS INSURANCE

A landlord’s insurance doesn’t cover a renter’s personal property. Renters insurance covers your belongings, provides liability protection, and pays additional living expenses if a fire or other event covered by your policy forces you to move temporarily.

Personal Belongings

Standard renters’ insurance protects your personal belongings(contents) against damage caused by fire, smoke, lightning, vandalism, theft, explosion, windstorm, water and other disasters listed in the policy. Floods and earthquakes are not covered.

To decide how much insurance to buy, you need to know the value of all your personal possessions, including furniture, clothing, electronics, appliances, kitchen utensils and even towels and bedding. In other words, if your home were to burn, you should have enough insurance to replace all of your possessions.

Taking an inventory of your belongings within the home help simplify the insurance claim in the event of a loss.

Liability Protection

A standard renters’ insurance policy will provide liability protection against lawsuits for bodily injury or property damage that you or your family members may cause to other people. It also pays for damage caused by your pets.

The liability portion of a renters’ policy pays for both the cost of defending you in court and for court awards, up to the limit of the policy. Liability limits generally start at about $100,000.

Medical Coverage

Your renter’s policy also provides No-Fault Medical coverage. This means that if a friend or neighbor is injured in your home, you can submit their medical bills directly to your insurance company. You can generally get $1,000 to $5,000 worth for this type of coverage. It does not, however, pay the medical bills for your own family or pet(s).

Additional living Expenses (ALE)

If your home is destroyed by a disaster that your policy covers and you need to live elsewhere during repairs, renters’ insurance covers your additional living expenses. Policies will generally reimburse you the difference between your additional living expenses and your normal living expenses. ALE covers hotel bills, temporary rentals, restaurant meals and other expenses you may incur while your home is being rebuilt.

Types of Renters’ Insurance

Actual Cash Value: Pays to replace your possessions minus an amount for depreciation (the reduction in the value of items due to age and use) up to the limit of your policy.
Replacement Cost: Pays the actual cost of replacing your possessions (with no deduction for depreciation), up to the limit of your policy. The price of Replacement Cost coverage is typically about 10% more than Actual Cash Value coverage but can be well worth the extra cost.

Other Types of Residential Property Policies

Condominium insurance. Condominium insurance covers your belongings, provides liability protection, and pays additional living expenses. It also covers damage to improvements, additions, and alterations to the condo.
Townhouse insurance. Townhouses may be insured by either an individual homeowners policy or an association master policy. If a townhouse is owner-occupied and the townhouse association doesn’t have a master policy on the building, you can purchase a homeowners’ policy on your individual unit. If the association has a master policy, you should get a Texas tenant homeowners policy to insure your personal property.
Mobil owners’ insurance. Mobile homes without wheels and resting on blocks or a permanent foundation may qualify for a homeowners’ policy. However, most mobile homes are insured by a Mobil owners’ policy. A Mobil owners’ policy is an auto policy that covers mobile homes used as residences. Mobil owners’ policies typically offer limited coverage.
Farm and ranch insurance. Farm and ranch owners’ policies insure homes outside city limits on land used for farming and raising livestock. You can pay extra to get coverage for certain farm equipment and outbuildings.

Factors that Affect Your Premium

Companies use a process called underwriting to decide whether to sell you a policy and what rate to charge you. Each company must file its underwriting guidelines with TDI and send us updates if the guidelines change. Companies use various factors to determine premiums. These include:

Your home’s age and condition. Companies may refuse to insure homes in poor condition, but they may not deny coverage solely because of a home’s age or value. However, most companies will charge you more if you are insuring an older house.
Your home’s replacement cost. If you have a replacement cost policy, your policy will pay to rebuild your home if it’s destroyed. Your premiums will increase in relation to the amount of your replacement cost.
Construction materials used in your home. Homes built primarily of brick are less expensive to insure than frame homes.
Where you live. Premiums will likely be higher in areas with a higher crime or high storm activity.
Availability of local fire protection. Premiums are usually lower for homes in areas with access to good fire protection.
Your claims history. Companies use your claims history to determine what to charge you for your coverage. Your claims history includes both the type and the number of claims filed.
Your credit score. Companies may consider your credit score when deciding whether to sell you a policy and what to charge you. However, a company can’t refuse to sell you a policy or cancel or non-renew your policy solely because of your credit score. Companies that use credit scoring must file their credit scoring models with TDI.

Discounts

Discounts can help you save money on your insurance. Most companies offer premium discounts if you reduce the chances of a loss. Each company sets the amount of the discounts it offers. You might be able to get a discount for:

having an alarm system;
having fire extinguishers, fire alarms, or a sprinkler system;
having a newer home or a home in good condition;
having other policies with the same insurance company or group;
being over 65; and
being claim free for three years in a row.

The above Texas property insurance descriptions and examples are meant to supplement, but not replace, the coverage detailed in your individual policy. Please refer to your actual policy contract language for coverage details.