Everything you need to know about insuring your new Texas home

February 20, 2020

How does homeowners insurance work in Texas? What do you need to know to insure your Texas home?

If you're one of the many individuals considering whether you should pack up a van and head to the Lone Star State, or if you're already a Texan and are planning an in-state move, you're probably looking for a new house to call home. But before you hire the movers, there are a few things you need to know about insuring your new Texas home!

Woman standing on the porch of her new Texas home.

Is homeowner insurance required by law in Texas?

While homeowner insurance is not technically required by law in Texas, it is still an extremely important and necessary aspect of buying a new home. 

If you have a mortgage, the lending company is legally allowed to require you to purchase a policy that covers the amount of the loan while there are payments remaining. If your house is in an area that is prone to flooding, the lender might also require you to purchase flood insurance from the National Flood Insurance Program.

Beyond that, having homeowners insurance in Texas (or anywhere) is just a good idea. For many of us, buying a house is one of the largest investments we'll ever make. That's why it's essential to protect your investment and prepare for the unexpected.

What types of homeowner insurance coverage are available in Texas?

In addition to insuring your home, many insurance companies in Texas combine various options into a single policy package.

Dwelling (your home) - This is what most people think of when they think about homeowners insurance. It protects your home and covers the replacement cost in the event of a disaster.

Personal belongings/property - It's not just your house that is at risk after a disaster. You also stand to lose your belongings within. This coverage can help you replace things like furniture, appliances, and even clothing. 

Outbuildings - Outbuildings are any structures that aren't directly connected to your house. These policies typically cover things like storage sheds and separate or standalone garages.

Loss of use and additional living expenses - If a disaster is so severe that you're forced to vacate your home while repairs are made, this coverage can help cover rent and other costs of living.

Personal liability protection - This provides bodily injury and property damage coverage for visitors, guests, and residence employees (like maids) for which you are legally liable. It can pay for their medical bills and your court fees if you are sued for such an incident. Lastly, if you damage another person's property, it can pay for that as well. 

Medical payments - If someone requires medical care after injuring themselves on your property, a medical payments policy can cover those costs.

It is important to note that these various coverage options and the amount of coverage they provide can vary from company to company. In some instances, you may want to extend the amount, which you can do by purchasing additional coverage or an umbrella liability policy.

What does a homeowner policy typically cover in Texas?

According to the Texas Department of Insurance (TDI), home insurance policies typically cover damages from the following:
  • Fire
  • Lightning
  • Explosion
  • Theft, vandalism, riots, and civil commotion
  • Aircraft and vehicles
  • *Windstorm, hurricane, hail
*This isn't available to counties and zip codes along Texas' Gulf Coast. See below.

What DOESN'T a homeowner policy typically cover in Texas?

According to TDI, home insurance policies do NOT typically cover the following:
  • Floods - Supplemental flood insurance is usually provided by the National Flood Insurance Program (NFIP).
  • Wind and hail - If you live on the Gulf Coast, most insurance companies won't cover this. For these areas, the Texas Windstorm Insurance Association (TWIA) may provide supplemental coverage.
  • Mold and water damage from continuous water leaks
  • Termites, insects, rats/mice, or other such destructive vermin 
  • Normal wear and tear
  • Earthquakes

How much does homeowners insurance cost in Texas?

Average cost of homeowners insurance in Texas

The average cost of home insurance in Texas is $1,945 (for $200,000 dwelling coverage with a $1000 deductible and $100,000 liability coverage), which makes it the seventh most expensive state in the country. By comparison, the national average is $1,288. 

While that may not seem ideal, the good news is that this rate can vary dramatically depending on where you settle in Texas. For example, for the same coverage outlined above, the average cost in Houston is $2,787. This is because Houston is more prone to hurricanes and powerful storms. However, Austin's average is $1,185 and El Paso's is $823.

Factors that determine your rate

Determining the rate for your homeowners insurance policy is a complex process with a variety of considerations to make.

Location and environmental factors - Some of the primary factors taken into consideration when evaluating insurance premiums are the possible natural disasters an area may be prone to. Some areas are more susceptible to certain events while others aren't likely at all.

For example, Texas happens to be prone to wildfires, hail, and coastal areas may experience strong winds and hurricanes. However, it is (extremely) unlikely that your Texas home will fall to an earthquake or burn in a river of lava oozing out of a volcano.

But it's not just about the danger - rates can be positively affected by location, too. For example, you may have a lower rate if your home is near a fire station.
Building materials - It isn't just where your house is built that determines your insurance rate - it can also be influenced by what your house is built from. Homes with a lot of wood in their design can take more damage from fires (and are more susceptible to fires), especially compared to homes made from less-flammable material like concrete and steel. As you can imagine, houses that burn easily cost more to insure. 

Age and condition of the home - Construction technology has come a long way over the years. That's why older homes are often more expensive to insure. Plumbing and wiring can be questionable and may require updating or replacing to comply with current building codes. All of this can contribute to a higher rate. 

However, any home that is in poor shape can cost you extra, regardless of the age. Cracked foundations, leaky rooftops, and other such defects can affect the insurance rates of new homes if they are not addressed. 

Cost of replacement - Another factor insurance companies take into consideration is the cost of replacing your home. This takes into account the size and square-footage of your home, the cost of the building materials, and other features or amenities.

Level of coverage options - The particulars of your policy and the coverage amounts you choose also play a role in establishing a rate. Often times, your deductible is a key piece of this equation; the higher your deductible is, the more you can typically save on your premium. Of course, this means that should you need to file a claim, you'll wind up paying more out of pocket, so it's about finding a balance that is right for you. 

Financial status and insurance history - As with most things, your personal financial status will play a role in your insurance rate. This includes your credit score and history, but may also include a separate insurance credit-scoring system. While this can impact your rate, it is important to know that a company can not turn down your application because of your credit score alone.

Finally, an insurer may look into your previous home insurance history. If you have had previous claims, it could potentially raise your rates.

What discounts can I get for home insurance in Texas?

While discounts vary from company to company, most insurance companies commonly offer discounts if you:

How can I make sure that my home insurance rates aren't raised?

Deter theft and crime - While you certainly aren't responsible for theft and burglary in your neighborhood, insurance companies might raise your rates if they feel your house is particularly susceptible to it or if they feel you haven't taken appropriate measures to secure your home. 

Installing deadbolts on all of your doors (not just the main entrance) and on your windows can go a long way to not only giving you peace of mind, but easing any concerns an insurance company might have. As previously mentioned, having some sort of burglar alarm or a monitoring service with connections to the police can help, too.

Keep the property in good condition - As part of the application process, insurance companies often perform an initial inspection of the home prior to writing a policy. As you can imagine, the condition of your home can influence their evaluation.

Before your home is inspected by the insurance company, give it a thorough inspection yourself. Make a note to repair any rotten boards, broken windows or window screens, and missing or broken shingles. It's also important to find and repair major cracks in the foundation or walls and any questionable steps and railings.

If there are any tree limbs or shrubs that could potentially damage the exterior of the house in any way, it might be necessary to trim them back away from it (especially near the roof and windows).

Finally, if your house is painted, make sure the coat is in good condition and touch up any flaking or patchy areas. This is more than just a question of cosmetics - gaps in paint coverage can lead to accelerated rot and weathering of wooden elements. 

What is the best insurance company in Texas?

As we discussed, there is a lot that goes into determining the cost of homeowners insurance in Texas. While different companies can certainly offer different rates, many of the factors involved depend on you and your individual needs. That's why it's essential to consider factors like a company's customer service record and their attentiveness to your circumstances.

When disaster strikes, the best insurance company is the one that you can count on to guide you through the claims process and get you back into your home as soon as possible. Rates are important, but it's also important to find an insurance company you can trust. 

A beautiful Texas home flying the Texas flag

When you're filing an insurance claim, great customer service is essential. Since 1896, Germania Insurance has been the Insurance Texans Trust for great coverage and outstanding customer service. But don’t take our word for it! Hear what our customers have to say

For more information about our insurance products, request a free quote online, or reach out to one of our trusted agents today!

Read more: Property insurance claims can be a hassle - but they don't have to be. Read our blog to learn how Germania Insurance leverages mobile technology to make property claims easier than ever!

by Geoff Ullrich

About the Author

Geoff Ullrich is a writer and Content Marketing Specialist at Germania Insurance.