Residential Property Insurance
Shopping for insurance can be confusing. Most people shop based on price, but choosing the right coverage and company are important, too.
Learn the Basics. It’s important to understand your options before you shop. See The Basics section to learn about common residential property insurance coverages.
The Three C’s of Shopping:
Cost, Coverage, and Customize
Use HelpInsure.com. This is a free tool from our office and the Texas Department of Insurance (TDI). You can compare sample prices, find discounts, get complaint info, and see rankings of many companies in Texas. You’ll still need to contact an agent or company to get exact prices.
Search online. The web is a good source of info as well. You can look for agents and companies, and read reviews.
Ask a company or agent. They can answer your questions and help you compare policies and prices.
*️⃣ There are different types of agents. Captive agents sell policies for only one company. Independent agents sell policies from more than one company. Some companies don’t use agents. They use call centers, websites, or phone apps instead.
Use the OPIC Policy Comparison Tool. This free tool allows you to compare policies from different companies.
Ask questions. When you talk to a company or agent, ask:
What policies do you sell?
- What policy do you sell the most?
- What policy has the most coverage?
- How are they different?
- What deductible options do you offer? How much would the different deductibles change my payment?
- What kinds of water damage does the policy cover? What doesn’t it cover?
- Should I get flood insurance? Do you offer it?
*️⃣ Most policies don’t cover flood damage. You may need flood insurance even if your lender doesn’t require it. Check with the National Flood Insurance Program (NFIP) or call 1-800-427-4661, or our Flood page for more info.
- What type of home-based businesses are not covered? Am I covered if I or a family member: work from home; host parties to sell products like cosmetics or kitchen items; care for other people’s children in the
home;or rent my home out for others to use?
Endorsements. Endorsements are policy changes that give you more or less coverage and may change your premium. You can choose to add some endorsements. Other endorsements are “mandatory endorsements” and are not optional.
Ask questions. When you talk to a company or agent, ask:
- What endorsements do most people buy?
- Are there any mandatory endorsements?
- How much will this cost or save me?
- Are any claims under this policy paid on an actual cash value (ACV) vs. replacement cost value (RCV) basis?
- If yes, is RCV available?
- Does this policy have a higher deductible for hurricanes and tropical storms?
- Is wind or hail coverage excluded?
- Is coverage available for special items such as jewelry, fine art, or guns?
- What discounts are available?
Three C's in Action
If you decide to save money by choosing less coverage or a higher deductible, make sure you do the math to understand how this will affect you when you file a claim.
A hailstorm does $7,000 worth of damage to your home. Your home is insured for $200,000. You have RCV coverage.
- With a 1% deductible, you pay $2,000 of the claim and the company pays $5,000.
- With a 3% deductible, you pay $6,000 of the claim and the company pays $1,000.
If you are considering ACV coverage or the company only offers ACV, make sure you know how this will affect you when you file a claim.
ACV vs RCV Example:
Your deductible is $2,000 and your roof is ten years old. The company says your roof depreciated 50%. A hailstorm hits and damages your roof. Replacing it costs $10,000.
- With RCV coverage, you pay $2,000 and the company pays $8,000. With RCV coverage, you pay $2,000 and the company pays $8,000. Note: Companies usually pay ACV until you prove that repair or replacement is complete.
- With ACV coverage, you pay $7,000 and the company pays $3,000. The difference is the depreciation of your ten-year-old roof, which is not recoverable.
Other Things to Think About
- You can check agent and company licenses using TDI’s Agent Lookup and Company Lookup tools. The Company Lookup tool also gives other info like the company’s financial rating and complaint statistics.
- If you can’t find insurance, the Texas FAIR Plan Association offers basic residential property insurance.
- If you live in a coastal county, you may have to get your wind and hail coverage through the Texas Windstorm Insurance Association (TWIA).
We’ve created a helpful, printable checklist of questions to ask an agent or insurance company while you’re shopping for residential property insurance.
Terms to Know
Actual cash value (ACV) – the amount to replace or fix your home and personal items minus depreciation. Depreciation is a decrease in value for age, or wear and tear.
Additional living expenses (ALE) – helps cover extra costs when you have to live somewhere else because your home was damaged.
Amount of insurance (AOI) – the estimated construction cost to replace your home, not the land.
Claim – a request made to an insurance company to pay for damage or injury.
Coverage – the damage or injuries an insurance company agrees to pay for under the policy.
Deductible – if you have a claim, the amount of the deductible is subtracted from your claim payment. It can be found on the declarations page of your policy.
First-party claim – a claim filed by you against your own insurance policy.
Increased cost of construction coverage – (also called law or ordinance coverage) coverage that pays the extra cost to rebuild your home to meet updated building codes or ordinances.
Liability – when you are responsible for other people’s injuries or damage to their property.
Premium – the amount you pay an insurance company for your policy.
Policy – a contract between you and the insurance company. The policy tells you what’s covered and what the insurance company is required to pay.
Policy period – the period of time your policy provides coverage.
Replacement cost value (RCV) – the amount to replace or fix your home and personal items.
Third-party claim – a claim you file against another person’s insurance policy or a claim someone files against your policy.