Ask the Agents #26 – Is homeowners insurance required?

Question: Is homeowners insurance required?

Answer: There is no Texas law that requires you to buy homeowners insurance. But no mortgage company or bank will offer you a mortgage without it. You can roll the payments into your monthly note to your mortgage holder, or you can pay it yourself.

Even if you own your home outright, insurance is a good idea. It provides peace of mind and a financial safety net if something happens at or to your home.

Homeowners insurance typically combines several types of coverage into a single policy. The coverage falls into four broad categories:

  • Physical structure Dwelling coverage is meant to safeguard your house and any attached buildings or structures (such as the garage, fences, porches) that are part of your property. It might cover damage from events like hail, lightning and fire.
  • Personal belongings This part of the policy covers your furniture, clothing or other belongings in the case that they are damaged, vandalized or stolen.
  • Liability This addresses lawsuits if you or a family member are responsible for an injury to someone outside of your household. – say, a friend tumbles down your staircase. It helps with medical bills, lost wages and other costs for people you are legally responsible for injuring. Likewise, it assists if you’re responsible for damaging someone else’s property.
  • Additional living expenses If your home is damaged so badly that you have to move out while it’s being repaired, this coverage helps with hotel bills, restaurant meals and other cost-of-living expenses.

What does homeowners insurance not cover? While policies generally do cover damage from water leaks, they don’t typically cover floods, such as we regularly get from hurricanes and tropical storms. You have to purchase a separate policy for flood insurance. Few policies cover damage from termites, rats or other vermin. They don’t cover losses that occur if your house is vacant for a certain length of time. They don’t cover wind or hail damage to trees and your landscape.

Extra coverage – or endorsements – can be purchased for things such as expensive jewelry and fine art, foundation, mold remediation, swimming pools and other specific items.

Every insurance company has its own underwriting rules and charges for premiums. That means that Company A might not like your wood roof and refuse to sell you a policy because they deem it a fire hazard. Company B might refuse to cover your home because it’s located too near a bayou or in a high-crime area. Company C might refuse your business because you and your home have had too many claims in the past.

Clearly, homeowners insurance is a vast and complex industry. Our best advice to you is to find a good agent. If you don’t have one already, ask around for a referral. We’re happy to provide a few contacts.