If you’re like many Texas homeowners , you may be confused about things that may affect your homeowners insurance premiums. As independent agents, we want to clarify and help you understand any confusion that you may have.
What Your Basic Homeowners Insurance Policy Covers
All home insurance policies in Texas have built-in basic coverage. These are things that your policy normally covers, including;
- Dwelling – damages or destruction to your home for covered losses.
- Non-attached structures – Things on your property that aren’t attached to your home, including a fence, garage, shed or outbuildings.
- Personal Property – coverage for your personal items like furniture, clothing and appliances, in situations where things are damaged or destroyed, or stolen.
- Loss of Use – If your home isn’t habitable because of severe damage, your insurance would pay for your living expenses while the home is being repaired. Insurance companies may choose to use one of two methods for deciding on the amount. They may pay a percentage of your dwelling insurance – usually 10 to 20 percent, or cover your living expenses for a specified time, typically up to 24 months.
- Liability coverage protects you if someone gets hurt on your property. Basic home insurance policies pay for medical expenses related to liability, but may be limited to $500 as the basic level in your policy. Increasing the amount of medical coverage is possible, but that will raise the cost of your premiums.
Factors that Can Affect Your Insurance Premiums
When you’re concerned about the cost of a home insurance policy, it’s important to understand everything, especially the trickier details. Knowing the difference between Named Perils and All Perils is one of those important distinctions to understand.
Named Perils is just that. It means that your homeowners insurance will only cover you for damages specifically named in the policy. Anything that isn’t specified wouldn’t be covered. All Perils is much more comprehensive, and you get far greater protection with it, but the cost is higher.
The other important things to understand are the difference between replacement cost and actual cash value.
Replacement cost covers the cost of repairing or rebuilding your home, based on whatever the cost of doing so is today.
If you opt for actual cash value, the insurance company only pays you what it would cost to replace your possessions or rebuild your home, but that type of coverage subtracts depreciation, and as the Texas Department of Insurance explains, that option may not give you enough money to rebuild your home after some horrible catastrophe.
These are important considerations, so instead of making a hasty decision, take the time to talk to your independent insurance agent. Don’t be afraid to discuss your personal situation and family needs. Their role is to help you get the best possible coverage. Ask your agent about discounts for bundling policies. Many companies offer discounts to homeowners who bundle home and auto with the same company.