Everything’s bigger in Texas. Unfortunately, so are homeowners insurance premiums. While the national average for homeowners insurance rates hovers around $860, Texas homeowners are paying an average of $1,100.

Sure, it would be nice to believe the higher rates suffered by Texas homeowners is due to our go big or go home attitude towards everything, including our homes, but a history of floods, unsettling foundations, and exposure to hurricanes are the actual driving factors that make insuring a home in Austin or Corpus Christi more expensive than almost anywhere else in the nation.

“We have been among the highest in the nation for as long as anyone can remember and have always been significantly higher than the national average,” said Alex Winslow of Texas Watch, in a 2010 interview with The Dallas Morning News.

With homeowners insurance premiums so high, homeowners in the lone star state should compare multiple rates and try to take advantage of every possible discount. Currently, there are over 100 insurance companies writing homeowners insurance policies in the state, which is a double-edged sword in many regards. While increased competition typically leads to lower rates, trying to find the right policy for your home at the right price can make the home buying process seem like a walk in the park.

Therefore, it helps to know as much as possible about Texas homeowners insurance before you choose an insurer. Understanding how homeowners insurance works, different types of policies, and typical policy coverages will allow you to make an informed decision and possibly save a ton of money each and every year.

How Homeowners Insurance Works

Your home is your biggest asset, so having adequate homeowners insurance is an absolute must. Essentially, homeowners insurance pays for the replacement of your home and personal property or any repairs that need to be made to your home if it is destroyed or damaged by an event covered under your policy.

A homeowners insurance policy is a written contract between a homeowner and an insurance company. With thousands of dollars on the line, it’s important to carefully read your policy to understand its coverages and limits.

Types of Texas Homeowners Insurance Policies

As a Texas homeowner, you can add endorsements to your policy to ensure your home and personal property is insured against almost any event, but there are really only two different types of policies sold in Texas.

All-risk homeowners insurance policies, also known as open perils or comprehensive coverage policies, provide broad protection, covering any cause of loss not explicitly excluded in the policy. Named perils policies, on the other hand, provide narrower protection, only covering causes of losses specifically stated in the policy.

Policy Coverages

Even all-risk homeowners insurance policies with seemingly comprehensive coverage often exclude coverage for some types of loss. Let’s take a look at the types of losses commonly suffered by Texas homeowners and see whether or not they are covered by a typical homeowners insurance policy.

Losses Covered by Most Texas Homeowners Insurance Policies

• Hurricanes, windstorms, and hail (may be excluded in coastal locations)
• Water damage suffered suddenly and accidentally
• Smoke damage caused suddenly and accidentally
• Fire and lightning
• Explosion
• Vandalism
• Theft
• Riots and civil unrest
• Vehicles and aircraft

Losses Not Covered by Most Texas Homeowners Insurance Policies

• Earthquakes
• Flooding
• Water damage from leaky pipes
• Freezing pipes when unoccupied for a length of time (unless the home is heated and the water is turned off)
• Hail and wind damage to trees and landscaping
• Losses suffered if a home is vacant longer than allotted for coverage by the policy
• Insects, termites, rats, and mice
• Mold (except when in relation to water damage covered by the policy)
• Wear and tear

Extra Coverage Endorsements

If you find yourself wanting extra coverage not offered by a homeowners insurance policy, you will need to add endorsements to your policy. Since most insurance companies charge a premium for extra coverage, you should determine what needs to be covered beforehand and compare premiums and rates with any extra coverage endorsements in mind.

Personal Property Coverage

Many Texas homeowners don’t know that homeowners insurance policies provide coverage for furniture, electronics, clothing, and other personal household items as a percentage of the total policy limit. For instance, if your home is insured for $200,000 and your homeowners insurance policy covers your personal property for up to 25 percent of your home’s coverage, your personal items will be insured for up to $50,000.

Of course, you can always pay a higher premium for more coverage. Some insurance companies may offer lower premiums than others for additional personal property coverage, so you should definitely keep this in mind as well.

Policy Dollar Limits

Many homeowners are happy with inadequate coverage in order to keep their homeowners insurance premiums as low as possible. After all, what are the chances of your street turning into the Mississippi River or Ferguson, Missouri? Unfortunately, these same homeowners are often left scratching their head when their insurance check barely takes care of their home’s value or worse yet, doesn’t cover it at all.

As a homeowner in the great state of Texas or anywhere else, it’s important to take an inventory of your personal items and add their total value to your home’s value when deciding on your policy’s coverage and dollar limit. A dollar limit on a homeowners insurance policy is the maximum amount an insurance company must pay if a home is destroyed. Therefore, it’s important to check your policy’s “Declarations Page” to see exactly what your policy will pay in the event of a disaster.

Shopping for Homeowners Insurance

As you can see, there are a number of pricing and coverage factors to consider when shopping for homeowners insurance in Texas. However, other factors like a company’s complaint index, license status, and financial rating should also be considered.

Fortunately, there are some well-known and respected Texas insurance companies that provide excellent coverage and score well in all these categories, allowing you to live comfortably knowing your home and family is protected.