Homeowner's insurance protects your home and possessions against damage from fire, theft, wind, hail, and other covered perils. It is required by all mortgage lenders. Standard coverage includes dwelling (the structure), personal property (your belongings), liability (if someone is injured on your property), and additional living expenses (if you cannot live in the home). In Texas, flood damage is NOT covered. You need separate flood insurance.
What It Covers
Coverage A (Dwelling) pays to repair or rebuild the structure of your home. Coverage B (Other Structures) covers detached garages, sheds, fences. Coverage C (Personal Property) covers your belongings like furniture, electronics, and clothing. Coverage D (Loss of Use/ALE) pays for temporary housing if your home is uninhabitable. Coverage E (Liability) covers legal costs if someone is injured on your property. Coverage F (Medical Payments) covers minor medical bills for guests injured on your property regardless of fault.
What It Doesn't Cover
Standard policies exclude flood damage (rising water from storms, hurricanes, overflow), earthquake damage, neglect or lack of maintenance, normal wear and tear, mold (limited coverage), pest infestations, and damage from earthquakes or earth movement. In Texas, flood insurance is a separate policy through FEMA's National Flood Insurance Program or private insurers. Even if you are not in a flood zone, 25% of flood claims come from low-to-moderate risk areas.
Texas-Specific Considerations
Texas has the second-highest homeowner's insurance premiums in the country due to hail, wind, and tornado risk. Deductibles for wind and hail are typically separate and higher (1-5% of the home's insured value). Some coastal and Hill Country areas require windstorm or wildfire endorsements. Shop at least three insurers and bundle auto and home for the best rates. Texas insurance rates have been increasing 10-15% annually due to catastrophic weather events.
How Much Coverage You Need
Insure your home for the replacement cost (what it would cost to rebuild today), not the market value or purchase price. Land value is not insurable. A $300K home in a desirable neighborhood might only cost $250K to rebuild. Use a replacement cost estimator from your insurance agent. Your mortgage lender will require at least enough coverage to pay off the loan, but that may not be enough to rebuild. Consider guaranteed replacement cost coverage if available.
How to Get the Best Rate
Shop 3-5 insurers. Bundle home and auto with the same company for 10-25% discount. Increase your deductible to $1,000 or $2,500. Improve your home's safety features (fire alarm, security system, impact-resistant roof). Maintain good credit (insurance companies use credit-based scores in most states). Ask about loyalty discounts, claim-free discounts, and senior discounts. Review your policy annually and update coverage as needed.
Flood Insurance Add-On
If your home is in a FEMA flood zone, your lender will require flood insurance. Even if not required, consider it. In San Antonio and the Hill Country, flash flooding can affect areas not in mapped flood zones. Flood insurance through NFIP costs about $700-$1,200/year depending on flood zone risk. Private flood insurance is also available and may be cheaper. If you buy a home in a flood zone, factor this into your monthly housing budget.