A Beginners Guide to Ensure Every Homeowner Understands their Protection


What is Homeowners Insurance?

Homeowners insurance is an insurance coverage policy purchased to cover losses and damage to your property if something unexpected occurs, such as a fire or a burglary. Homeowners insurance typically covers four kinds of incidents:

● Interior damage
● Exterior damage
● Loss or damage of personal assets/belonging
● Injury

Homeowners Insurance Does Not Cover “Acts of War” or “Acts of God”

What does this mean? As an individual living in the Baytown area – which is considered a high risk area for natural disasters – it is important to understand that natural disasters are not typically covered by homeowners insurance itself; if your property is at high risk for these types of damage, it is recommended that you seek out additional insurance to stay protected. In the 1960’s, flood damage was removed from homeowners policies, and similar reductions in coverage have been increasing ever since. Due to the high cost of damages incurred by natural disasters or severe weather storms, insurance providers typically exclude both “Acts of War,” and “Acts of God” from their coverage.

Acts of War include damage associated with invasions, insurrections, riots, strikes, revolutions, military coups and terrorism.

Acts of God include earth earthquakes and floods and can even include events such as hurricanes and tornadoes.

Do You Need Homeowners Insurance?

When an individual obtains a mortgage on a home, homeowners insurance is typically required. You are provided the opportunity to complete a price comparison between various insurance companies, so you can select the provider that best suits your needs (and is approved by your lender). If you do not have homeowners insurance, your lender could purchase insurance on your behalf and then charge you monthly for the bill.

At the end of the day, unpredictability is one of life’s most consistent traits, so homeowners insurance is always recommended.

What To Consider When Searching For Your Homeowners Insurance

No matter what, you should always read your potential policies carefully. Due to increased expenses, especially from natural disasters and weather patterns, insurance companies are now placing more stipulations in their policies, ultimately reducing their liability for your property. For example, a policy that identifies “Hail Coverage” may only cover new roofs or those which have been replaced within the last 10-15 years. This means that if your roof is 15+ years old, your home will not be covered – sometimes the devil is in the details.

When selecting a policy, ensure that is it the right one for your home – or more importantly, the the location of your home. After reviewing multiples companies policies, you may come to find that your best options are to add additional insurance coverage, such as:

● Flood Insurance
● Windstorm and Hail Insurance
● Earthquake Insurance
● Extra Coverage depending on your needs

What is extra coverage? Let’s look at Storm Harvey. In 2017, many homeowners did not have insurance coverage specifically for sewer and/or drain damage, leaving them without a way to file claims for the damages they incurred. Unfortunately, it is challenging today to identify one perfect policy that will cover all potential losses and damages.

As a resident of the Gulf Coast, you may also want to consider TWIA, or the Texas Windstorm Insurance Association. TWIA provides windstorm and hail insurance in the Texas seacoast. However, in order to qualify for TWIA, you must have already obtained a flood insurance policy and met specific criteria outlined by the organization.

Moving forward, there are additional criteria to consider to help you determine if the company you’re considering is the right right one for you. Consider the following:

1. Deductible: What is the deductible on the policy? Remember, the deductible is the amount you must pay before the insurance company will cover damages. A lower deductible can be less painful if the time comes that you need to use your coverage!
2. Premium: The premium is the monthly amount that you owe to cover the insurance policy. Fortunately for you, Texas law requires insurance companies to offer rates that are “reasonable, adequate, not excessive to the risks for which they apply, and not unfairly discriminatory.”
3. Customer Service Reviews and Ratings: When dealing with property damage, you want to ensure that your policy provider is committed to helping you and honest to their word. The last thing you want is for a company to nickel and dime you when you are facing homelessness or severe property damage. When selecting a provider, review their ratings and read their customer satisfaction reviews. Also, review the ratings related to their claims process. A rapid response from your claims company is essential.

What If My Home Was Damaged, But I Did Not Have The Right Coverage?

This is the unfortunate circumstance no one wants to be in. Sadly, there are thousands of individuals each year who are confronted with home damage and find out too late that their kind of losses they sustained were not covered by their basic policy, leaving them without financial assistance to cover major damage. If this has happened to you, check out our blog: What To Do With A Damaged Home? You could also call us, and we would be happy to assist you with both education about your potential next step and an updated assessment of your home’s value.

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