Your home may be the largest and most significant asset you own. More than that, it is where you and your family go through the motions of daily life, entertainment friends and neighbors and make memories for holidays and special events. You may not want to think about a worst case scenario involving considerable property damage or loss of personal contents in the home, but these events can and do happen to homeowners. In Texas, homeowners are at risk to loss related to tornadoes, tropical storms and hurricanes, severe storms with hail, fire, flooding and more. Homeowners insurance can minimize your financial loss related to these types of disastrous events. In addition, if you have a home mortgage on your property, your lender may require you to maintain coverage as part of your mortgage agreement.
What You Need to Know About Homeowners Insurance
Before you buy your homeowners insurance in Texas, you should review a few points. First, you should research your lender’s requirement for homeowners insurance. This generally will be equal to the replacement value for your home, but it will not match the sales price or appraised value. This is because if you have a total loss on your home, your land will still have value. You will never experience a total loss. Therefore, you typically will insure the value of the improvements only. In addition, you may need to purchase liability coverage and personal property insurance. If someone is injured on your property, the liability insurance will pay for the expenses related to the lawsuit up to the coverage limit. Personal property will cover the contents inside the home, such as clothing, appliances, furnishings and more.
A Word About Your Deductible
You will be able to adjust your coverage limits within reason to make the premium more affordable. You may also adjust your deductible. It is common to have a one percent deductible on homeowners insurance, and this means that you will pay one percent of the replacement value of the home each time you file a claim. A common alternative is to raise the deductible to two percent of the replacement value of the home to lower the premium. Remember that you will need to pay the deductible each time you file a claim. If your deductible is too high, it becomes unaffordable for you to use your insurance when needed. A good rule of thumb is to keep an amount of money equivalent to your insurance deductible in your savings account for immediate use if needed.
When You File a Claim
If your property has been partially or fully damaged, you will need to file a claim against your homeowners insurance. Your homeowners insurance companies in Texas likely has a process that needs to be followed to file a claim, and this may begin with calling the company directly. A claims processor or adjuster may contact you to schedule a time to inspect the damage. You will then receive a quote from your insurance company that estimates the repair costs. If your repair costs are too low and your deductible for homeowners insurance is too high, it may not be worth filing a claim. Instead, you may simply pay for the repairs out of your own pocket.
It is a good idea to understand more about your homeowners insurance options and to review your policy regularly. Keep in mind that the replacement value of your home can adjust yearly, so you should update your policy regularly so that your insurance is up-to-date. Whether you are purchasing a new policy or you need to update your existing homeowners insurance, keep this points in mind.