Is home insurance required in Texas?

Home insurance isn’t required by Texas law, but most lenders do require the coverage as part of the mortgage contract. If you own your home outright, you have no obligation to buy home insurance.

However, increases in extreme weather in Texas make clear the importance of protecting yourself with home insurance. Following the significant winter storms in 2021, for example, insurers in Texas paid out over $10 billion in insured losses, with an average residential incurred loss of $15,800, according to the Texas Department of Insurance (TDI).

Texas home insurance coverage options

Standard coverages for most Texas home insurance policies include the following:

Dwelling and other structures coverage: Like in other states, Texas home insurance policies provide coverage for the dwelling and everything attached to it, as well as other structures like detached garages. The dwelling coverage is based on the replacement cost of your home, and the other structures coverage is a percentage of that amount.

Personal property coverage: In addition to protecting your home’s structure, home insurance in Texas provides personal property coverage.

“This protects your belongings, such as furniture, clothing, and electronics, from covered perils both inside and outside your home,” explains Sandoval.

Personal liability and medical bills coverage: As a homeowner, you can be personally liable for issues like a visitor getting injured on your property, but home insurance in Texas protects against that. Homeowners insurance includes coverage for medical bills.

“It can also cover legal expenses in the event of a lawsuit,” says Sandoval.

Additional living expenses coverage: Additional living expenses (ALE), also known as loss of use coverage, pays for some expenses you incur when you can’t live at home due to a covered loss, such as hotel bills.

“This coverage is especially important when you have a mortgage and must continue making your payments, which can be difficult if you have been uprooted from your home due to a covered loss. This was one of the most utilized coverages during the Texas Winter Storm of 2021,” says Sandoval.

Additional coverages

In addition to these standard coverages, some homeowners choose add-ons, either as endorsements to standard policies or as separate policies, to increase coverage. Some of these may be included in your Texas home insurance policy, but you should never assume; talk to your insurance company to make sure you have what you need.

Some examples include:

  • Windstorm and hail coverage: While many Texas homeowners are covered for windstorms and hail as part of a standard policy, this type of damage might be excluded for those who live near the coast, explains Sandoval. You may need to buy a standalone policy to cover windstorm and hail-related perils or add an endorsement.
  • Flood insurance. Floods are a common natural disaster and are not covered by standard home insurance.
  • Sewer backup/drain coverage: While some water damage is covered as part of a standard home insurance policy, sewer or sump pump backup coverage is a popular endorsement.
  • Replacement cost coverage: Lastly, some homeowners add replacement cost coverage to get the full value of their personal property protected. This coverage “helps pay to repair or replace damaged property without deducting for depreciation,” says Sandoval.

Texas home insurance coverage for natural disasters

Home insurance in Texas provides coverage for some natural disasters but not all. As mentioned, some policies include hail and windstorm coverage, including for hurricanes, and others require an endorsement or separate policy. When it’s included, hurricane coverage may have a separate deductible.

Hurricane or windstorm deductibles are usually a percentage of the dwelling coverage, commonly 2%. So, for a home with dwelling coverage of $300,000, a 2% hurricane deductible is $6,000. 

When natural disasters like ice storms cause damage like collapsed roofs or frozen pipes, home insurance usually covers the repairs.

However, flood damage is not included in standard home insurance policies. Instead, Texas homeowners who want flood protection need to purchase a separate flood insurance policy, usually through the National Flood Insurance Program (NFIP.)

“Given Texas's susceptibility to flooding, especially in coastal areas and flood-prone regions, purchasing a separate flood insurance policy is highly recommended,” says Sandoval.

Earthquakes are another type of natural disaster that requires separate coverage.

It’s important to talk to your insurance company about what’s covered to make sure you have everything you need.

How much is home insurance in Texas?

Home insurance in Texas is expensive compared to the rest of the country. On average, a policy with $300,000 in dwelling and liability coverage with a $1,000 deductible costs $4,583 per year. In comparison, the national average premium for home insurance is $2,604 annually.

Keep in mind that hurricane deductibles, which are separate from standard dwelling and personal property deductibles, can affect these rates. The amount of coverage you need and the location of your home will also affect rates. Shop around to find the best and the cheapest home insurance in Texas.

Why is homeowners insurance so expensive in Texas?

Home insurance is so expensive in Texas due to factors like the degree of weather-related risk and inflation.

“The cost of claims has skyrocketed due to increased costs for labor, materials,and litigation, just to name a few. The cost to rebuild homes has increased tremendously, along with the cost to repair cars, medical care, and much more. This, in turn, has dramatically increased homeowner’s insurance rates,” says Sandoval.

Texas homeowners insurance laws

As mentioned, homeowners insurance isn’t a legal requirement in Texas, but insurers do still have certain laws they need to follow, which can benefit homeowners. In Texas, the TDI adopted a Consumer Bill of Rights that provides protections for insurance buyers.

For example, insurers can not deny coverage based only on your credit, per the TDI. And if you have been denied coverage, you have the right to a full, written explanation.

Furthermore, if your premiums increase by 10% or more, your insurer has to notify you at least 30 days before renewal, thereby giving you more time to comparison shop.

What is the home insurance claim time limit in Texas?

Aside from extenuating circumstances like natural disasters, insurers have 15 days after receiving all the pertinent information to decide whether to accept or deny your claim, per the TDI. The insurance company has to send you a check to pay the claim within five business days following approval.

How to save on homeowners insurance in Texas

There are a few ways homeowners can save on home insurance policies in Texas.

  1. Raise your deductible. A higher deductible means lower insurance rates, so it’s an easy way to save. Just make sure you can afford the deductible if you need to file a claim.
  2. Bundle your insurance. Another option is to bundle your home and auto insurance policies for a discount. You may be able to bundle other policies as well.
  3. Ask about other discounts. You also might be able to save money by paying your premium in full upfront, going to paperless billing or several other possible discounts.
  4. Keep your credit score good. Insurance companies use your credit score as a factor in your rates, and bad credit can mean much higher rates.

“In Texas, most insurance companies use what’s called an insurance score. This is similar to a credit score and includes several factors such as claim history, driving record, length of time with insurance companies, and credit history is a part of your insurance score but it is not solely based on credit,” says Sandoval.

How to buy homeowners insurance in Texas

Before you buy homeowners insurance, take the time to shop around and make sure you are buying the right coverage. To do this, follow a few basic steps:

  • Review the coverage you need; take the time to sit down with an insurance expert and discuss coverage options and endorsements.
  • Get multiple quotes with the same coverage levels.
  • Compare the policies on rates and any extras that might be included.
  • Review the company’s reputation, including customer complaints and financial stability, before you buy. 

J.D. Power, AM Best and Insurance.com’s list of the best homeowners insurance companies are all great places to review companies before you choose a policy.

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