What Standard Home Insurance Covers in Texas
A standard Texas homeowners policy (typically an HO-3 or HO-5 form) is an "open perils" policy for the dwelling - meaning it covers all causes of loss except those specifically excluded. Personal property is usually covered on a "named perils" basis, covering only listed causes of loss.
Covers repair or rebuilding of your home's structure from covered losses including fire, lightning, windstorm, hail, explosion, smoke, and more.
Covers detached structures on your property - garages, fences, sheds - typically at 10% of your dwelling limit.
Covers your belongings against named perils. Special limits may apply to jewelry, firearms, electronics, and art. Scheduled items can be added.
Pays for additional living expenses - hotel, meals, storage - if your home is uninhabitable while repairs are completed.
Pays for legal defense and damages if you're found legally responsible for bodily injury or property damage to others.
Pays for minor medical expenses for guests injured on your property, regardless of fault - typically $1,000–$5,000.
What Standard Home Insurance Does Not Cover
Understanding exclusions is as important as understanding what is covered. These are the most common gaps that surprise Texas homeowners at claim time:
Standard policies exclude flood - defined as rising water from outside your home. This includes storm surge, overflowing rivers and creeks, and heavy rainfall that enters from the ground level. You need a separate flood policy through NFIP or a private flood insurer.
Earth movement, sinkhole collapse, and earthquake damage are excluded. Separate endorsements are available from some carriers.
Texas's expansive clay soils move with moisture changes and can crack foundations. This is generally not covered under standard home policies as it falls under 'settling and earth movement' exclusions.
Roof deterioration, aging plumbing, and gradual damage from deferred maintenance are not covered. Insurance is for sudden, accidental losses - not ongoing maintenance.
Mold resulting from a sudden covered water loss (like a burst pipe) may be covered. Mold from gradual moisture, humidity, or maintenance issues generally is not.
In certain Texas coastal counties, windstorm damage is excluded from standard policies. A separate TWIA policy is required. See the TWIA section below.
Flood Insurance in Texas
Texas has more flood events than almost any other state. It's not just coastal areas - flash flooding along creek beds and drainage systems has caused devastating losses in neighborhoods that were not in high-risk zones on FEMA maps.
Flood insurance is purchased separately from your homeowners policy. The two main options are:
Federally backed flood insurance available to property owners in participating communities. Covers building and contents up to statutory limits. Has standardized terms and a mandatory 30-day waiting period before coverage takes effect (with some exceptions).
Private market flood policies can offer broader coverage, higher limits, and shorter waiting periods than NFIP. They are increasingly available in Texas and may be a better fit for some properties. Pricing and availability vary by carrier and location.
Important note:
If your mortgage lender requires flood insurance (standard for homes in FEMA Special Flood Hazard Areas), you must maintain it. Even if you own your home free and clear, flood coverage is worth considering given Texas's flood history - including in areas outside mapped high-risk zones.
Coastal Windstorm and TWIA
Texas designates certain coastal counties as "catastrophe areas" for windstorm purposes. In these counties - including Galveston, Brazoria, Nueces, Calhoun, Jefferson, and others - standard homeowners policies typically exclude windstorm damage.
Homeowners in these areas must obtain a separate windstorm policy, usually through the Texas Windstorm Insurance Association (TWIA). TWIA is the insurer of last resort for windstorm and hail in the designated catastrophe area.
If you live in a coastal catastrophe county:
- 1.Your standard homeowners policy covers everything except windstorm/hail.
- 2.You need a separate TWIA policy for windstorm and hail coverage.
- 3.You need a separate flood policy (NFIP or private) for flood coverage.
- 4.Homes must meet certain building standards to be eligible for TWIA coverage.
Call 281-445-1381 to determine whether your county is in the designated windstorm zone and what policies you may need.
Actual Cash Value vs. Replacement Cost Coverage
This is one of the most consequential coverage decisions - and one many homeowners don't realize they've made until they have a claim.
| Factor | Actual Cash Value (ACV) | Replacement Cost (RC) |
|---|---|---|
| What it pays | Depreciated value of the loss | Full cost to repair/replace with new materials |
| Effect of age | Older items pay less | Age doesn't reduce the payout |
| Example: 15-yr-old roof | May pay 25-40% of replacement cost | Pays full current cost to replace |
| Premium | Lower | Higher |
| Out-of-pocket at claim time | Higher gap between payment and actual cost | Lower gap - closer to true cost |
| Best for | Lower-cost coverage when cost is the priority | Minimizing financial exposure after a major loss |
Understanding Texas Home Insurance Deductibles
Texas home insurance policies often have more than one deductible. Understanding the structure before you have a claim is essential.
A flat dollar amount (e.g., $1,000 or $2,500) that applies to most covered losses - fire, theft, water damage from a burst pipe, and similar events. You pay this amount before insurance pays the rest.
A separate deductible that applies specifically to wind and hail claims. It may be structured as:
- · Flat amount: e.g., $2,500 regardless of loss size
- · Percentage of dwelling: e.g., 1% of $300,000 dwelling = $3,000; 2% = $6,000
Percentage deductibles are common in Texas and can represent a significant out-of-pocket cost after a hail or wind event. Make sure you know your exact deductible structure.
Some coastal Texas policies include a higher deductible that triggers when a named tropical storm or hurricane is the cause of loss. This can be 2-5% of the dwelling value. Verify whether your policy has this provision.
How to Calculate the Right Dwelling Limit
Your dwelling coverage (Coverage A) should equal what it would cost to fully rebuild your home from the ground up - not what you paid for it, not its current market value.
Why market value and rebuild cost are different:
Market value includes land, location, and buyer demand. Rebuild cost is based purely on construction - labor, materials, permits, and debris removal. In Texas's current construction market, rebuild costs have risen significantly. A home with a $400,000 market value may cost $350,000–$500,000+ to rebuild depending on materials and location.
To estimate your rebuild cost, consider:
- ·Square footage × local construction cost per square foot (varies by location and finish quality)
- ·Age and complexity of the home - custom features cost more to replicate
- ·Current lumber, labor, and material prices in your market
- ·Debris removal cost (typically 5-10% of rebuild cost)
Many insurers offer inflation guard or automatic increase riders that adjust your dwelling limit annually to keep pace with construction cost inflation. Ask your agent whether this is included or available on your policy.
Texas FAIR Plan - Last Resort Coverage
If no standard insurance carrier will cover your home, the Texas FAIR Plan provides basic property insurance as a last resort. It covers fire, lightning, windstorm (excluding designated coastal areas), hail, and explosion.
The FAIR Plan is not designed to be a long-term solution - it offers more limited coverage than a standard policy and may cost more. Homeowners who qualify for standard market coverage should pursue that first.
Common reasons homeowners need the FAIR Plan include: very old homes with deferred maintenance, prior losses that made the property uninsurable in the standard market, or location in an area where standard carriers have reduced availability.
Common Questions Answered
Is flood insurance included in a standard Texas home policy?
No. Standard homeowners insurance in Texas does not cover flood damage from rising water - whether from a hurricane storm surge, heavy rain, or overflowing creek. Flood insurance is purchased separately through the National Flood Insurance Program (NFIP) or a private flood insurer.
What is the difference between actual cash value and replacement cost coverage?
Actual cash value (ACV) pays what your property was worth at the time of the loss, accounting for depreciation. Replacement cost coverage pays what it actually costs to repair or replace the damaged property with new materials, without deducting for depreciation. Replacement cost policies cost more but leave significantly smaller gaps after a loss.
What is a wind and hail deductible?
Many Texas policies have a separate, often higher deductible that applies specifically to wind and hail claims. It may be expressed as a flat dollar amount or as a percentage of your dwelling coverage (commonly 1-2%). A 2% deductible on a $300,000 dwelling means you pay the first $6,000 of any wind or hail claim before insurance kicks in.
Do I need separate windstorm insurance if I live on the Texas coast?
Yes, if your property is in a Texas coastal county designated as a catastrophe zone - including Galveston, Brazoria, Nueces, Calhoun, and others - standard home policies typically exclude windstorm damage. You'll need a separate windstorm policy, usually through the Texas Windstorm Insurance Association (TWIA), in addition to your standard coverage.
How much dwelling coverage do I need?
Your dwelling coverage should equal the estimated cost to fully rebuild your home from the ground up, not its market value or purchase price. Construction costs have risen significantly in recent years. An independent agent or licensed appraiser can help you calculate the right coverage amount based on your home's square footage, construction type, and local building costs.
Can I get home insurance for an older home in Texas?
Yes, but it may require working with an independent agent who has access to carriers that specialize in older homes, or it may require the Texas FAIR Plan if no standard carrier will write the property. Key factors include the age and condition of the roof, wiring, plumbing, and any deferred maintenance.
How to Compare Texas Home Insurance Policies
When comparing quotes, don't compare price alone. These are the factors that actually matter:
Is the Coverage A limit actually adequate to fully rebuild your home?
What triggers each deductible? What are the dollar amounts?
HO-3 or HO-5? Open perils vs. named perils for personal property?
What is excluded and what separate policies are recommended?
ACV or replacement cost? Are high-value items separately scheduled?
Does the carrier have the capacity to pay claims after a widespread Texas event?
Coverage by Texas City
Each city in our service area has specific risk factors and coverage considerations. Select your city for local guidance:
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