You may be surprised to learn that not all homeowner’s insurance policies are the same, especially in Texas. In this article I will explain the coverage questions you should be asking when shopping for homeowners insurance. Following this guide will help you make informed decisions during the insurance buying process and guarantee that you are getting the best homeowners insurance policy for your money.
When someone calls my office for a quote on home insurance they normally start by giving me their current coverage limits.
Coverage limits are things like:
- Coverage A/Dwelling – Provides coverage for your home.
- Coverage B/Other Structures – Covers any other structures on your property. This coverage is most often an automatic 10% of coverage A. Be sure to let your agent know if you have any other structures that exceed the limit that is included in the policy.
- Coverage C/Personal Property Coverage – Provides coverage for your personal belongings such as your furniture, clothes, and electronics. Always let your agent know if you have things like fine art, jewelry or firearms. Coverage for these things is often limited under Coverage C, your agent will most likely suggest that you cover them on a separate insurance policy or schedule them.
- Coverage D/Loss of Use – Covers additional living expenses that you may incur should your home become uninhabitable from a covered loss.
The coverage limits listed above are built into every policy. Don’t assume that just because the coverage limits match that you are getting a quote for the same type of policy that you currently have. Below is a list of questions you should ask any agent about the policy they are quoting you. You may also want to verify that your current policy covers these things.
Is this policy a replacement cost policy? Replacement cost coverage pays what it would cost to rebuild your home should anything happen. You also want to verify that the personal property coverage is also replacement cost.
Does this policy cover replacement cost on my roof? Texas is notorious for wind and hail storms. A lot of companies have started putting limitations on roof exposures by reducing the coverage for your roof to actual cash value. Make sure the roof is also covered for replacement cost.
Is water damage covered? Some policies exclude water damage coverage or they may only offer $5,000 coverage for water damage. You want to confirm that your policy covers 100% of the dwelling limit for sudden and accidental discharge of water. Sudden and Accidental water damage would be things like a toilet overflow or pipe bursting. In addition to sudden and accidental discharge of water you want to ask if they offer coverage for repeated leakage and seepage of water. This would provide coverage for leaks that happen over an extended period of time but have gone undetected. Repeated leakage and seepage of water is often added by endorsement. It is worth the extra cost to buy water damage coverage.
What about damage to the foundation caused by water? This coverage is most often added by endorsement. You want to purchase this endorsement! Adding this coverage to your policy would provide coverage for damage to your foundation caused by a covered water leak.
What is my deductible? The industry standard is a 1% deductible. You want to make sure that your deductible is 1%. Some companies may try to sneak a 2% wind and hail deductible on the policy and that can be a lot of money to come up with when something unexpected happens.
What is my liability limit? Always make sure your homeowners liability limit is at least $300,000. You can usually increase this to $500,000 for only a few dollars more per a year.
What about Medical Payments to others? You can normally increase this from $1000 to $5000 for only a few dollars a year.
Asking these questions will help you verify that the homeowner’s insurance policy you are buying isn’t only a great price but that it also provides great protection. I would love to help you find the best homeowners insurance policy for you.
Originally written October 14, 2011, Updated April 2016