Homeowners insurance, and why flood is separate

Why it matters

A home is usually the biggest thing you own, and insurance is what lets you rebuild after a fire, storm or break-in without starting over. If you finance the home, your lender will require a homeowners policy before closing, so it pays to shop early, ideally before your option period ends.

What a policy covers

The Texas Department of Insurance describes six main parts of a homeowners policy. Each has its own dollar limit, shown on the declarations page.

• DwellingDamage to the house itself from a covered cause.
• Other structuresDetached garages, sheds, fences and similar structures.
• Personal propertyBelongings that are stolen, damaged or destroyed. Jewelry and art often have lower limits.
• Additional living expensesRent, food and other extra costs while a covered loss is repaired. Often limited to 10 to 20% of dwelling coverage.
• Personal liabilityInjuries or damage you are legally responsible for, plus court costs if you are sued.
• Medical paymentsMedical bills for people hurt on your property.

What it usually leaves out

Most policies exclude these, according to TDI:

• Flooding
• Continuous water leaks, and mold unless it comes from a covered loss
• Termites, insects and rodents
• Losses while the home is vacant longer than the policy allows
• Wear and tear
• Earthquakes and earth movement
• Wind or hail damage to trees and shrubs

Wind and hail are usually covered in this part of Texas. Some policies use a separate deductible for wind and hail, so ask how yours is figured.

Replacement cost vs. actual cash value

Replacement cost pays to repair or replace at today's prices. Actual cash value subtracts depreciation for age and wear, so it pays less. TDI's example is a $10,000 roof claim with a $2,000 deductible:

Most companies require you to insure the home for at least 80% of its replacement cost, and some require 100%.

Flood insurance is separate

Most homeowners and renters policies don't pay for flood damage. To cover flooding, you need a separate flood insurance policy. That matters on the Guadalupe and Comal rivers and the Guadalupe Valley lakes, but floods happen well outside mapped flood zones too. FEMA reports that nearly one-third of NFIP flood claims from 2014 to 2024 came from outside high-risk flood areas.

When it's required. If a home is in a high-risk flood zone, zones that start with A or V on FEMA's maps, and you have a mortgage from a federally regulated or insured lender, you have to carry flood insurance.

Before you buy. Look up the address on FEMA's Flood Map Service Center, ask the seller about past flooding and any flood claims, and ask whether there's an elevation certificate. Then get flood quotes during your option period, not after closing.

Condos, townhomes and rentals

• Condos. A condo policy covers your belongings, the inside of your unit, liability and living expenses. The association's master policy typically covers the building, so ask what it includes.
• Townhomes. Depending on what the HOA's master policy covers, your policy may need to cover just the interior or the interior and exterior.
• Renters. Covers your belongings, not the building.
• Rural homes. Homes on farm or ranch land may need a farm and ranch policy.
• Short-term rentals. A home rented to guests often needs different coverage than one you live in. See the short-term rental rules and ask your agent.

Shopping for a policy

Companies use different rules and charge different rates for the same home, so compare more than one. Premiums depend on things like the home's age, condition, replacement cost, building materials, location, fire protection, claims history and credit. Texas insurers can't deny you based on credit alone.

Ask about discounts for monitored alarms, impact-resistant roofs and bundling policies with one company. HelpInsure.com, run by the Texas Department of Insurance, lets you compare discounts by company. Insurers may also look at your CLUE report, a record of past claims you can get free once a year.

Talk to a licensed insurance agent and get quotes from more than one company. I'm a Realtor, not an insurance agent, so I can't advise on coverage.

Common questions