for your HOME

Homeowners insurance pays to repair or replace your home or personal property if it is damaged or destroyed because of something -- such as a fire, storm, or theft – that’s covered by your policy. Your policy states the types of losses it will cover and the maximum amount it will pay.

Note: A policy is a contract between you and your insurance company. Read it carefully to understand exactly what it covers and the dollar limit of the coverage. You should also understand your rights. Texas has a Consumer Bill of Rights for homeowners and renters insurance. Your company must send you the Bill of Rights when you get or renew a policy.

Texas Homeowners Policies

Most homeowners policies in Texas combine the following five coverages:

Dwelling pays if your house is damaged or destroyed by a covered loss. It also pays for unattached structures and buildings, such as fences, detached garages, and storage sheds.

Personal property pays if the items in your house (such as furniture, clothing, and appliances) are stolen or damaged or destroyed by a covered loss.

Liability provides $25,000 in coverage if you are sued and found legally responsible for someone else’s injury or property damage. You may be able to purchase up to $1 million in additional coverage.

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 -- if your dog bites someone at the park, for instance. A basic homeowners policy pays $500 in medical bills, but you may buy up to $5,000 in medical payments coverage.

Loss of use pays your additional living expenses (housing, food, and other essential expenses) if you must 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).

Types of Policies

Insurance companies in Texas may sell several types of policies with different levels of coverage.

If a company offers you a policy with less coverage than you’d like, ask if other policies are available. You may also be able to buy additional coverage by adding endorsements to your policy.

The two types of policies sold in Texas are:

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.

Note about replacement cost and actual cash value:

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 does not include the value of your land. Ask your company if you are not sure how much it would cost to rebuild your house.

Actual cash value is the replacement cost of your property minus depreciation. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild.

Policy Coverages

Companies may exclude coverage for certain losses. Even the most comprehensive all-risk policy will exclude certain types of damage.

The following chart shows the most common types of losses covered or excluded from a homeowners policy:

Information Source: Texas Department of Insurance. www.tdi.texas.gov