Home Insurance Coverage in Texas

Minimum Coverage Requirements

In Texas, the majority of insurance companies mandate that you insure your home for a minimum of 80% of its replacement cost. However, some companies require that you insure your home for the full amount. Although Texas does not mandate homeowners insurance, it is probable that your mortgage lender will mandate coverage. If you don't have enough coverage, you'll have to pay the difference out of pocket for any repairs or rebuilding.

Dwelling Coverage Amount

Your dwelling coverage should reflect the current cost to rebuild your home, not its market value. The average cost of home insurance in Texas is $3,851 per year, with typical coverage amounts of $300,000 in dwelling coverage. However, your specific needs depend on your home's size, construction materials, and local building costs. Given Texas's history of severe weather damage, consider replacement cost coverage rather than actual cash value, which factors in depreciation.

Personal Property Coverage

Home policies usually pay a percentage of your dwelling coverage limit to restore or replace your furniture, clothes, and other property. Standard policies typically cover 50-70% of your dwelling amount for personal belongings. Create a detailed home inventory to discern if you need more coverage for valuable items like jewelry, electronics, or collectibles.

Liability Protection

Liability protection of $300,000 is included in standard policies. If you have substantial assets to safeguard or if you frequently host gatherings, it may be beneficial to increase this quantity. Most experts advise that liability coverage should be at least $300,000 to $500,000, although it may be necessary to obtain higher quantities based on your net worth.

Additional Coverage Considerations

Standard homeowners insurance policies in Texas do not include protection against rising waters, requiring separate flood insurance from the National Flood Insurance Program. For certain Gulf Coast counties, you may need separate windstorm coverage from the Texas Windstorm Insurance Association.

Given the state's history of flooding and its vulnerability to hurricanes, cyclones, and hailstorms, it is especially important to incorporate flood insurance in Texas. It may be necessary to obtain windstorm coverage if you live in coastal regions. Additionally, you may wish to investigate the possibility of obtaining higher deductibles in order to lower premiums, as well as extended replacement cost coverage to provide inflation protection.

Deductible Strategy

You might have different deductibles for each type of coverage. In Texas, wind and hail damage often carries separate, higher deductibles. Choose deductibles you can afford out-of-pocket while balancing premium costs. Higher deductibles lower your premiums but increase your financial responsibility when filing claims.