TexPro Insurance handles homeowners insurance with ease.
Whether you're a first time home buyer or have owned a home for some time, understanding homeowners insurance can be quite complex. Below is some important information about homeowners insurance. If you have any questions at all, please contact us we would love to address them.
Understanding Homeowners Insurance
Homeowners insurance is designed to protect your property, and you as the owner. While there are many basic policy coverages as standard, it is important to consider the optional coverages as every insurance company can be different.
TexPro Insurance is an independent agency, we have numerous insurance partners to help you find the optimal option for your homeowners policy.
What does my Homeowners Policy Cover?
The ability to repair or replace your home
Coverage for your personal belongings inside your home
Liability Coverage: If someone gets hurt on your property, your homeowners policy can provide coverages for both legal claims and medical payments
Homeowners Policy Breakdown:
Coverage A: This refers to the amount of coverage you have to the building of the house.
Coverage B: This refers to other structures, such as a detached garage, shed, or fencing.
Coverage C: This refers to personal property. Personal property includes household contents and other personal belongings used or worn.
Coverage D: Additional Living Expenses. If your house cannot be occupied due to a covered loss, this will cover expenses for you to maintain a normal standard of living up to a policy limit For example: home burns down and temporarily no where to live, there is coverage for renting another home or apartment until your home is repaired.
Coverage E: Personal Liability. This protects you against claims from accidents that occur on your property in which you own or rent.
Coverage F: This refers to coverage for medical expenses. (more info below) This coverage is for anyone other than an insured for accidents and injuries that occur on your property. This typically provides coverage from $1,000 to $5,000 for immediate use, and this coverage is available regardless of being at fault/legal liability.
What are some optional coverages I should consider?
While there are various optional coverages available, here are some common policy options that we always recommend for our customers:
Water back up and Water Damage
Extended Replacement Cost
Service Line Coverage
*These are common examples. Please contact us at TexPro for a specific analysis of your needs.
What does homeowners insurance not cover?
While this is a very broad question based on the options selected within a policy, a homeowners insurance policy will typically exclude the following:
"Acts of God" or natural disasters
What is typically limited on a homeowners policy?
Most insurance companies have limitations on the following items. There is an option for homeowners insurance policies to increase these limits. However, if any of these items fall over the category of $5,000 to $10,000 dollars, you may need to purchase a separate jewelry policy. Please contact us TexPro if you have any questions about these common policy limits.
Common limits on homeowners insurance policies:
Money, bank notes, coins
Watercraft including trailers, furnishings, and equipment
Trailers (other than boat trailers)
Firearms (applies to theft only)
Silverware and goldware (applies to theft only)
Rugs, tapestries (theft only)
Replacement Cost vs. Market Value
A common topic that comes up when shopping for home insurance is the way your policy covers the VALUE of your home. Understanding how these terms and how the apply in insurance will help you make the right financial decisions for your hard earned assets.
Replacement cost, or sometimes called “reconstruction cost”, is the cost necessary to repair or replace your entire home.
Market Value is the amount that your home would sell or market for in its current condition, and based on the current market & economy. Market Value is influenced by outside conditions beyond constructions costs, such as the current economy, school zones, crime rankings, etc.
The point in calculating Replacement Cost, is to ensure that in any market condition, your home will be replaced or repaired back. You wouldn't want to insure 2/3's of your home, and that is why Replacement Cost calculations exist, to make sure that you are financially equipped with your insurance policy in a total loss.
When your home is insured at Replacement Cost, your insurance company will cover you (subject to policy limits) for the cost to rebuild or repair your home.
How is this determined?
Replacement Cost is calculated by using a special insurance calculator that is designed to properly determine the current replacement value of your home called a Replacement Cost Calculator, or Replacement Cost Valuation (RCV). Construction costs do adjust over time, making sure to review your policy annually to ensure proper valuation is essential.
Why is it important to have Replacement Cost?
If your home were to incur a total loss, having the proper Replacement Cost value can protect you from large out-of-pocket costs. For example, if your home is currently worth $175,000 on the market, but it costs $225,000 to rebuild, an instance such as a fire that completely destroys the house could leave you with that $50,000 out-of-pocket.
What is Extended Replacement Cost?
Some insurance carriers offer an awesome feature that allows you to insure your home with an extended coverage amount over the calculated Replacement Cost. These are often found with home value extension levels from 25% to 100% of the Replacement Cost Value. This is an excellent tool to prevent any sort of potential excess if a total loss occurs, as well as to protect against construction material inflation.
For example, your home is calculated at a Replacement Cost Value of $200,000 and is insured with an insurance policy. Your home suffers a covered fire loss, and you know have to totally rebuild the home. During the policy term, construction materials for wood has taken a 23% increase in cost due to limited supply. Your home after the wood price increase is now in excess of the policy limits, now being estimated at $225,000 to rebuild. However, with a '25% Dwelling Extension' feature, this would leave you covered with a total amount of $250,000 ($200,000 + $50,000 extension), and therefore leaving you at rest knowing you can fully rebuild your home back without any out-of-pocket expense.
What is 'Medical Expense' coverage that is listed on a Homeowners Policy?
Coverage F on your homeowners policy refers to coverage for medical expenses. This coverage is for anyone other than an insured (you) for accidents and injuries that occur on your property. This typically provides coverage from $1,000 to $5,000 for immediate payout, and this coverage is available regardless of being at fault/legal liability.
Important Reasons WHY having Medical Expense coverage is ESSENTIAL:
It is always nice to have a helping hand, regardless of who is at fault. If someone is injured at your property and they don't have the means to afford healthcare, this is a great tool for immediate medical expense payouts.
Acts as a financial shield: Ultimately, having these funds may prevent someone from suing for more monetary compensation. This is a very important piece as it can help avoid attorneys getting involved.