Homeowners insurance is one of the essential forms of insurance you can have. It is a standard precaution a lot of homeowners take to guard their largest asset. Understanding what homeowners insurance is and how much it typically costs are two valuable pieces of insight when buying or owning a home.
The average cost of homeowners insurance in Texas is between $1,900 and $2,000 a year. Texas is a coastal state, so its insurance premiums are some of the highest in the country. This is a $700 difference from the national average, which is around $1,200 to $1,300 a year.
This is just the average, so everyone's homeowner's insurance will be different because of several factors. One is the simple fact that everyone's homes and lifestyles are different. Therefore prices will differ. This is why it's important to understand the variables that go into determining the cost of homeowner's insurance. Keep reading below as we break everything down for you.
What Does Homeowner's Insurance Cover?
There are generally many different tiers for homeowner's insurance. The basic coverage typically covers problems such as fire damage, smoke, explosions, vandalism, theft, vehicles, civil unrest, or weather-related incidents such as lightning strikes, tornadoes/wind damage, and hail. More lucrative policies cover other possible scenarios, such as accidental electrical damage, water damage, plumbing, heat, and air, etc.
Home insurance covers liability. This means if someone gets injured on your property or something of their's is damaged while on your property, then the insurance company will pay for them. However, the insurance company will only pay as much as you've paid them to cover. They will only cover up to your limit on your policy.
Home insurance also covers your costs to live somewhere else while your house is getting repaired. If your house is unlivable due to a loss that's covered, then you don't have to worry.
Flood and earthquakes are typically sold in their policies. Many people in danger zones, such as California, opt to buy earthquake insurance since they are so prevalent there. In New Orleans, more people probably have flood insurance than in Texas. While you can purchase these policies anywhere in the country, most people hold off on buying these policies unless there's a history of floods or earthquakes in their area.
How Much Coverage Does $1,900 To $2,000 Get Me?
Another piece of information to mention is the actual dollar amount that insurance companies pay if something is to happen to your home. For example, most insurance companies offer a $100,000 minimum in liability insurance. However, you can buy more if you would like.
For a Texan paying close to $2,000 a year in premiums, he or she is probably getting around $200,000 in dwelling insurance (to rebuild or repair home), $100,000 liability, and a $1,000 deductible.
What Determines The Cost Of Homeowners Insurance?
Homeowners insurance is complicated; there's no getting around it. The way the cost is determined is more than just looking at your house and giving you a price. Many factors come into play. We've researched, so you don't have to.
There are a few critical factors in determining the cost of your home insurance premiums:
- Your claims history
- Your area's claim history
- Cost to rebuild home
- Materials your home is built with
- Home's age
With your claims history, if you've made a lot of claims, insurance companies may charge you more to cover their basis. Your area's claim history is another point of reference. Owning pets is also often a liability for them because of the damage they can do to a home.
Other significant factors have to do with your actual home. How much does it cost to rebuild? How old is the home? What materials is your house made of? All of these questions matter because the insurance company wants to make sure they take the necessary precautions to protect themselves as well as you. Believe it or not, if your home is built with more flammable material (such as wood, instead of brick), your premiums will more than likely be higher.
The last (and biggest) factor in determining the cost of your homeowner's insurance is, of course, what your policy covers. While this doesn't fall into the same category as the factors mentioned above, it does play a big role in how much you'll pay. Because at the end of the day, you decide if you want basic coverage or more broad coverage.
Insurance companies have a bottom line to meet, just like every other business. So if they aren't making a profit selling you and everyone else insurance, then they aren't in business. The cost of keeping you safe is something they take into consideration as they price their policies. Whatever they spent last year in repairs and replacements, they have to make sure they're charging their customers more than that so they can stay in business. These are the reasons insurance can sometimes be so expensive.
Is Home Insurance Required In Texas?
By law, homeowner's insurance is not required. However, if you don't own your home outright, then there's a good chance your mortgage lender will require you to have some sort of homeowner's insurance. Almost all mortgage lenders do this, so they are covered in the event of an accident or disaster.
Why Is Home Insurance So Expensive In Texas?
Compared to other states, Texas is one of the leaders for expensive home insurance. But why? Is Texas that unsafe? There are a few contributing factors to Texas' pricey premiums, and the weather is most of them. Hail is prevalent in Texas. North Texas has more hail than almost any other place. It makes sense that premiums would be higher to account for this potential loss every year.
Texas premiums are also high because of catastrophes like Hurricane Harvey. Insurance companies must play it safe by raising premiums for all, even if you were/are not affected. Texas also has plenty of wildfires, and it's hard to keep them under control when Texas is so large. This is yet another reason nature is helping raise premiums.
Texas homeowner's insurance is one of the most expensive in the country. Paying $1,900 to $2,000 a year may seem like a waste, but in reality, protecting your biggest asset is one of the smartest moves you can make. Texas is known to be affected by all kinds of extreme weather conditions, and you never know what may happen. The good news is insurance companies offer all kinds of policy packages, and you can choose the type of coverage that works for you.
Unsure about whether or not to get homeowner's insurance? Check out this article.
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