The Impact Of Home Insurance Regulations For Texas Residences

Homeowners insurance policies in Texas falls into four broad categories - HO-A, HO-B, HO-C and Approved Alternative policies. The three HO policies are regulated by the office of public insurance, and each of these policies will be written the same way regardless of which insurance company issues them. Two identical policies may vary widely in price, however. Approved Alternative policies can offer specialized levels of coverage, but must be approved by the state commissioner of insurance in writing before they can be sold by an insurance company.

Most home insurance coverage in Texas is actually a blend of five different types of coverage. The first three are dwelling, personal property and liability. Dwelling coverage is used to cover damages to a homeowners residence, personal property coverage pays for items which are stolen from inside the home, and liability pays out if the homeowner is found to be responsible for injury to another party in the home. The last two types - loss of use and medical payments, pay out sums of money over time if either the property can no longer be lived in, or if someone on the property is injured and requires medical care. Medical payments typically only cover up to $500 and loss of use between 10 to 20 percent of the total home coverage.

HO-A policies are the state's most basic. They have very low limits of coverage for both a house and its contents. These can be upgraded to HO-A "amended polices", which include specific types of add-on coverage. HO-B policies are the most typical. They include coverage for most types of damage and offer the best value for the money, but not every insurance company will offer an HO-B policy. HO-C policies are the most expensive, but also offer the highest payout in the event of a home insurance claim. Both HO-B and HO-C policies offer "replacement cost" coverage for a home, meaning that they will payout the cost to rebuild the home at current market price, up to the maximum dollar limits of the policy purchased. HO-A policies provide only "actual cash value" coverage, which means that a policy holder is entitled only to the replacement value of the home, less depreciation. The older a home, the smaller this value will be.

Texas home insurance policies do not include coverage for floods or hurricanes, although both of these types of coverage can be purchased separately. Hurricane insurance can be obtained via the Texas Windstorm Insurance Association, but a new policy cannot be obtained once a hurricane enters the Gulf of Mexico. In Texas, insurance law makes it essential to balance premium cost with coverage levels, especially in the event of a total loss.

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