Texas Automobile and Homeowners Insurance Coverages Explained
Texas Automobile Insurance
Texas law requires you to have auto liability insurance, and if you still owe money on your car, your lender requires that you also carry collision and comprehensive coverage. Auto insurance pays for damages, injuries, and other losses specifically covered by your policy. Read your policy carefully to know exactly what it covers. Pay special attention to the exclusions section, which lists the things your policy doesn´t cover. The front page of your policy is called the declarations page. It contains useful information such as the exact name of your insurance company, your policy number, and the amount of each of your coverages and deductibles.
Texas has an automobile insurance Consumer Bill of Rights. Your company must send you a copy with your policy or policy renewal. Take time to read it to fully understand your rights under Texas law.
Texas Requires Proof of Financial Responsibility!
If you drive in Texas, you must show that you can pay for accidents you cause. Most Texas drivers do this by buying auto liability insurance. Texas law requires minimum coverage of $20,000 per injured person, up to a total of $40,000 for everyone hurt in an accident, and $15,000 for property damage. This basic coverage is called 20/40/15 coverage. However, basic coverage might not be enough if you are held liable for an accident. You should consider buying more than the basic limits. When you buy an auto policy, your insurance company will send you a proof-of-insurance card. You will have to show proof of insurance when you
Texas law provides severe penalties for violating the state´s financial responsibility laws. A first conviction will result in a fine between $175 and $350. Subsequent convictions could result in fines of $350 to $1,000, suspension of your driver´s license, and impoundment of your automobile.
Auto Insurance Coverages
The Texas Personal Automobile Policy offers eight types of coverage. Texas law requires you to have basic liability coverage. The other coverages are optional, but if you still owe money on your car, your lender will require you to have collision and comprehensive coverage. The following describes the eight types of coverage available in the Texas Personal Automobile Policy. Auto insurers may offer alternative policies if approved in advance by TDI.
Coverage for Stereo Equipment
Your policy won´t pay for tapes, compact discs, cellular phones, citizen band radios, or stereo equipment not permanently installed in your car. However, you can buy endorsements to your policy that provide separate coverage for these items for an additional premium.
Insurance Coverage When Renting a Car
Auto rental agencies offer collision damage waivers as well as liability policies. The collision damage waiver is not insurance. It is an agreement that the rental company will waive its right to recover the costs of the damage to the auto from the renter with certain exceptions, regardless of who is at fault. If you have an auto liability policy, your policy already covers damage to a rental car. Your coverage limit, however, might be less than the value of a rental car. If you rent cars often, it might cost less to raise the liability limit on your auto policy rather than buying collision damage waivers each time you rent. The Texas Automobile Rental Liability Policy provides liability insurance for renters who do not have a personal auto policy.
If you don´t own a car, but borrow or rent cars often, you can buy a non-owner liability policy. A non-owner policy pays for damages and injuries you cause when driving a borrowed or rented car but not for damage to the auto you are driving.
Coverage When Driving in Other States, Canada, and Mexico
Your Texas policy automatically meets the financial responsibility requirements of other U.S. states and Canada. Mexico, however, does not recognize U.S. auto liability policies.
Mexico does not require drivers to have automobile liability insurance. However, drivers can be held criminally and financially responsible for any auto accidents they cause. If you´re in an accident that results in an injury, police in Mexico may detain you until they determine who is at fault. You will have to show that you either have insurance recognized by the Mexican government or the financial ability to pay any judgment against you.
You can buy Mexican liability insurance from Texas agents who specialize in it. Some U.S. companies provide a free endorsement extending your policy´s coverage to infrequent trips of up to 10 days and as far as 25 miles into Mexico. You can buy coverage for longer stays, but it is valid only within 25 miles of the border. Telephone books in border towns list insurance agents that specialize in car insurance for travel in Mexico. Your local agent also might be able to help you find coverage with a Texas-licensed Mexican company.
You also may be able to buy a limited Mexico "tourist" endorsement that extends your Texas liability coverage to pay expenses exceeding those covered by a Mexican liability policy. This endorsement covers trips of any distance and any length of time. Ask your agent which endorsements your insurance company offers.
Coverage of New or Additional Automobiles
If you buy a new or additional car, your policy will automatically cover it, but there are certain limitations you should be aware of.
An additional car automatically has the same coverage as the car with the broadest coverage provided by your policy. For example, if you have two cars - one with liability coverage only and one with liability, collision, and comprehensive - and you buy a third car, the third car will automatically have liability, collision, and comprehensive coverage.
A replacement car automatically has the same coverage as the car it replaced. For example, if you trade in an older car that only had liability coverage, the new car will automatically have only liability coverage.
Be sure to notify your insurance company as soon as possible that you have added or replaced a car and which coverages you want. You could lose coverage on the new car if you wait longer than 30 days.
Homeowners insurance protects you from financial losses caused by storms, fire, theft, and other events outlined in your policy. It is important to know what´s in your policy. Make sure you read your policy carefully and understand your specific coverages. It´s also important to know your rights. Texas has a Consumer Bill of Rights for homeowners and renters insurance. Your company must send the Bill of Rights with your policy or renewal.
Don´t wait until you have a claim to review your policy and to know your rights.
Texas Homeowners Insurance Policies
You can buy a dwelling policy that covers only the structure of your house. Or, like most Texans who own their homes, you can buy a homeowners policy, which combines five different types of coverage:
Dwelling - pays for damage to your house and any outbuildings, such as detached garages and storage sheds.
Personal property - pays when household items, including furniture, clothing and appliances, are damaged, stolen, or destroyed.
Liability - protects you against financial loss if you are found legally responsible for someone else´s injury or property damage. A homeowners policy automatically provides $25,000 in coverage. You can buy up to $1 million in coverage for an extra premium.
Medical payments - pays medical bills for people hurt while on your property. It also pays for some injuries that happen away from your home, such as your dog biting someone. A basic homeowners policy pays $500 in medical bills. You can pay extra and get up to $5,000 in medical payments coverage.
Loss of use - pays living expenses if your home is too damaged to live in during repairs. The most common policy pays up to 20 percent of the amount for which your house is insured.
Types of Texas Homeowners Insurance Coverages
Insurance companies may sell several types of policies in Texas, each with a different level of coverage. Three of the policy forms available for sale in Texas - the HO-A, HO-B, and HO-C - are standardized. This means the policy language and coverages provided by these policies are the same, regardless of the company writing the policy. Although an HO-B policy written by one company will be exactly the same as an HO-B policy written by another company, the two companies may charge different rates.
Companies may offer alternative policy forms, if approved in advance by the Commissioner of Insurance. These policies are not standardized and usually provide varying coverages. Read your policy carefully to know exactly what coverages are included. Some companies may sell more than one policy form. In general, however, a company will offer only one form to its customers. If a company offers you a policy with less coverage than you´d like, ask if other policy forms are available. You also may be able to add additional coverage by buying endorsements to your base policy.
Following is a brief description of the types of policies sold in Texas:
Generally, HO-B policies provide the most coverage for the price, but some companies do not offer the HO-B policy. For a side-by-side comparison of the coverages provided by the policy forms approved for sale in Texas, visit the website of the Office of Public Insurance Counsel
What Texas Homeowners Insurance Policies Do and Don´t Cover
Companies may exclude coverage for certain losses. For example, if you live on the Gulf Coast, you might receive an endorsement that excludes coverage for wind and hail damage. In areas with a history of hail storms, some companies provide only actual cash value coverage for roofs instead of full replacement cost. Actual cash value pays for damage minus depreciation on the roof, depending on its age and condition.
Most policies will not cover mold remediation beyond that necessary to repair or replace property damaged by a water loss otherwise covered by the policy. The HO-A policy offers no coverage for mold remediation or for damage caused by water leaks, although some companies may offer coverage for sudden and accidental water leaks as an endorsement to the base HO-A policy. Some of the other approved policy forms also cover sudden and accidental water leaks, while others may not. Read your policy or ask your agent whether your policy covers water leaks and mold remediation.
Insurance companies are required to offer you mold remediation coverage. Depending on the company, this coverage will be offered in dollar or percentage increments up to 100 percent of your policy´s limits. If you have questions or concerns about how a mold claim is being handled, or if you need information about how to minimize mold losses, ask your insurance company for a set of guidelines regarding mold claims.
Other Residential Policies
Buy enough coverage to avoid a major financial loss if your home is severely damaged or destroyed. This means keeping a realistic dollar amount of coverage on your house.
Replacement Cost Coverage of Your House
The standardized HO-B and HO-C policies provide replacement cost coverage for your house, up to your policy´s dollar limits. Replacement cost is what you would pay to rebuild or repair your home, based on current construction costs. Replacement cost is different from market value. It does not include the value of your land. If you are not sure of the amount it would cost to rebuild your home, your company or agent usually has construction cost tables to help you figure the cost.
To receive full payment (minus your deductible) for a partial loss, such as a hail-damaged roof, you must insure your house for at least 80 percent of its replacement cost. If you insure your house for less than 80 percent of the full replacement cost, the insurance company will pay only part of the expense of a partial loss.
Unless you buy an endorsement increasing your coverage, HO-A policies only provide actual cash value coverage. Actual cash value is the replacement cost of your property minus depreciation. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild it.
If you have an HO-A amended policy or an approved alternative policy, read your policy carefully to know whether it offers replacement cost coverage or actual cash value coverage.
Your Policy´s Dollar Limits are Important
If you insure your house for $100,000, that´s the most you will get if it is destroyed, even if it would cost more to replace it. The Declarations Page on the front of your policy shows how much coverage you have. Talk with your agent or company representative if you have any questions about your insurance limits. If a fire destroys your home, Texas law requires the insurance company to pay the full amount of the policy - even if this amount is more than the replacement cost.
Don´t wait until you have a claim to learn your policy´s limit.
Coverage for Your Personal Property
HO-B policies automatically cover household contents - furniture, clothes, appliances, etc. - up to 40 percent of the amount your house is insured for. This means if you insure your house for $100,000, its contents are insured for up to $40,000. You can get more coverage by paying a higher premium. However, this automatic coverage pays only the actual cash value of damaged, stolen, or destroyed household goods. Actual cash value is an item´s replacement cost, minus depreciation.
You may be able to pay extra and buy replacement cost coverage that ignores depreciation and pays for a new item like the one you lost.
Replacement cost coverage gives you more protection than actual cash value coverage. The following example illustrates why: A burglar steals your six-year-old television set. With actual cash value coverage, you get only what you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company pays to replace your TV with a new set similar to the stolen one.
Companies generally want proof you replaced an item before paying your claim in full. However, if you have an HO-B policy, the company must advance you the first $1,500, plus the depreciated value of any other damaged property, without requiring proof of replacement. After that, the company must pay you within five business days after receiving proof you replaced, restored, or repaired the property. A company can offer to replace the items instead of paying cash, but the choice is yours.
Inventory Your Property
Many people learn after a fire or storm that they didn´t have enough personal property coverage. Making an inventory will help you decide how much insurance you need. It also will simplify claims.
Your inventory should list each item, its value, and serial number. Photograph or videotape each room, including closets, open drawers, storage buildings, and your garage. Keep receipts for major items in a fireproof place.
Homeowners insurance on certain items like jewelry and furs is limited. You may be able to buy more coverage for an extra premium.
Texas ranks at or near the top of the nation in weather-related property damage each year. A large portion of this damage is due to flooding.
Homeowners policies do not cover flood damage. However, the National Flood Insurance Program (NFIP) offers flood coverage in many areas. Local insurance agents sell NFIP flood policies and can tell you about the program in your area.
For more information, call NFIP
If a lender determines that a property is in a special flood hazard area, the borrower is required to purchase flood insurance. A special flood hazard area has a 1 percent chance of being inundated by flood.
Hurricanes and Windstorm Insurance
The Texas Windstorm Insurance Association (TWIA) is the state´s insurer of last resort for wind and hail coverage in the 14 coastal counties and parts of Harris County on Galveston Bay. TWIA provides wind and hail coverage when insurance companies exclude it from homeowners and other property policies sold to coastal residents. You can buy TWIA coverage through local insurance agents if you need it.
When a hurricane enters the Gulf of Mexico (80 degrees longitude and 20 degrees latitude), you can no longer change or purchase new Windstorm coverage.
If you plan to build, add to, or renovate a home or other structure and want TWIA coverage, you or your builder should request an inspection by a TDI windstorm inspector or a Texas licensed professional engineer appointed by TDI. Your agent can tell you how to get an inspection.
If you are concerned about earthquakes, you can get coverage with a separate policy. The cost is relatively low because earthquakes are rare in Texas.
Extra Coverage (Endorsements)
You might want more coverage for certain items than your policy provides. For an extra premium, you may be able to buy endorsements that expand or increase the coverage on these items. Some of the most common endorsements expand or increase coverage for jewelry, fine arts, camera equipment, coin or stamp collections, computer equipment, and radio and television satellite dishes and antennas.
Commercial property insurance helps businesses, including farms and ranches, pay to repair or replace buildings, associated structures, and contents damaged by fire, storms, theft, and other events outlined in the policy.
This publication provides general information about the kinds of commercial property coverage that are available in Texas. It can help you evaluate different commercial property policies, understand how rates are determined, and ask the right questions when shopping for insurance. You should review your policy carefully to understand your specific coverage.
Overview - Texas Commercial Property Insurance
Business owners who either own or lease their buildings may purchase commercial property insurance. It’s important for a tenant business to understand that the building owner’s insurance policy will generally only cover the building or structure, not the contents of the building belonging to the tenant. Tenants should purchase their own policies to insure their on-premises property, such as machinery, furniture, and merchandise. An insurance company will evaluate factors such as a structure’s location and construction materials to determine the likelihood of a property loss. The cost of tenant coverage will generally be significantly less than for owned property coverage because the policy will only apply to the leaseholder’s on-premises property and not the building.
Typically, businesses operating on multiple premises are covered by a single policy. In certain instances, such as when two business locations serve different functions and have different risk profiles, separate policies may be needed. This may be the case when a business insures both an office location and a factory, for example.
A commercial property policy may pay based on either the “actual cash value” or “replacement value” of a loss. An actual cash value policy will pay only the amount of the property’s worth at the time of the loss. Worth is determined by the value of the property minus depreciation due to age and normal wear and tear. A replacement value policy will pay to purchase new property of like kind and quality after a loss. In general, a replacement value policy better ensures that a business can fully recover after a significant loss. Replacement value policies are typically more expensive than actual cash value coverage because the policy limits should reflect the cost to replace damaged property with new property.
Almost all policies have a “deductible,” which is an amount the business must pay out of pocket toward the cost of a claim before the insurance company will pay. Generally, the higher a policy’s deductible, the lower its premium will be because the policyholder is accepting a greater share of the cost of any eventual claims. Most policies will also include a “policy limit,” which is a maximum amount the insurer will pay toward any covered loss.
Insurers use a process called “underwriting” to evaluate the likelihood that a given policyholder will file a claim for a loss. The greater the likelihood, the higher the premium will be. If an insurer determines that a business poses too great a risk of a loss, it may decline to issue a policy entirely. If your business is declined for coverage, keep shopping; companies have their own criteria for determining whether to issue coverage and the rate to charge. If one company turns you down or is too expensive, another may be willing to issue coverage or offer a lower premium. There may also be certain steps your business can take to lower its risk and either qualify for coverage or get a lower rate.
Different types of commercial property policies protect against different risks, or “perils.” It’s important to understand which types of losses a policy does and does not cover. A commercial property policy will almost never cover any loss that is either not specifically included in the policy language or is specifically excluded. Therefore, be sure you read a policy carefully before you purchase it. You may need to buy certain specialized policies, such as flood, windstorm, or crime coverage to be protected from those particular losses.
Commercial property insurance is not standardized in Texas. Insurance companies must comply with minimum requirements but have a great deal of flexibility to develop their own policies. As a result, the coverage provided by one insurer’s policy may differ substantially from that of another. When shopping for commercial property insurance, be sure to evaluate the costs and coverages of the policies you’re considering.
Commercial Insurance Policy Coverages
Commercial property policies in Texas generally fall into one of three categories:
Many business owners buy additional coverages. Some are available as separate policies, and others are available as endorsements, or “riders,” that enhance or amend a policy’s base coverage. Generally, adding endorsements to a policy will increase your premium. Ask your agent about these additional coverages:
Coverage against crimes
There are several types of policies that can protect a business from losses resulting from crime. Policies may be issued on a “loss sustained” or “discovery” basis. Loss sustained coverage pays for losses that occur during the policy period, while discovery coverage pays for losses that occur at any time. Both types require that losses be discovered during the policy period or extended reporting period. Common crime coverages include:
Commercial multi-peril policies
Commercial multi-peril (CMP) policies combine one or more coverage forms, such as commercial property, general liability, inland marine, crime, or commercial auto, in a single policy. A business owner could add other types of coverage to ensure full protection within the convenience of a single policy.
Business owner programs (BOPS) are a common form of commercial multi-peril policy. BOP policies are tailored to the needs of small-business owners and combine property and liability coverage in one policy.
Texas Flood Insurance
Some companies may include flood coverage in their commercial property policies for areas with a low flood risk. However, most flood insurance in the United States is administered by the National Flood Insurance Program (NFIP).
(For more info please visit the Texas
Department of Insurance)