Types of Insurance Might Need

Other Types of Insurance You Might Need

Flood Insurance
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

1-800-427-4661

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.


Earthquake Insurance
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.


Personal Umbrella Liability Insurance
If you want more liability coverage than a homeowners policy provides, you can buy a separate umbrella policy. Because policies vary, make sure the agent or company fully explains the coverage.

Shopping for Homeowners Insurance

Rates vary widely among companies, so it pays to shop around. Following are some useful tips to help you find the best deal for your money:

• Decide before shopping the specific coverages and coverage amounts you need.
• Choose the highest deductible you can afford. Your deductible is the amount you must pay yourself before the insurance company will pay. Higher deductibles will lower your premium, but remember that you´ll have to pay more out of your own pocket if you have a claim.
• Because rates vary, ask several companies and agents for price quotes. When comparing rates, make sure they are for the same coverages. TDI publishes a homeowners rate guide that can help you shop. The rate guide lists companies and their annual premiums for policies with $100,000 coverage on the house, $40,000 on its contents, and a 1 percent ($1,000) deductible.
• When getting a price quote or applying for insurance, answer questions truthfully. Wrong information could cause you to get an incorrect price quote or could lead to a denial or cancellation of coverage.
• Consider factors other than price, including a company´s financial rating and its complaint index. Financial ratings indicate a company´s financial strength and stability, while the complaint index indicates a company´s customer service record. Buy only from licensed companies and agents. You can find out whether a company or agent is licensed and learn a company´s financial rating from an independent rating organization and its complaint index calling TDI´s Consumer Help Line or by visiting the TDI website

  1-800-252-3439

  463-6515 in Austin

  www.tdi.state.tx.us

• Ask your agent whether you qualify for discounts. Some discounts are required by the state, while others are optional with companies.

Factors that Affect Your Premium
Companies may use a number of criteria to establish your individual premium. These include:

• The age and condition of your home. Older homes and homes in poor condition generally are more expensive to insure. In addition, companies may refuse to insure homes in poor condition. However, they can´t deny coverage solely because of a home´s age or value.
• Your home´s replacement cost. Since your policy will pay to rebuild your home if it is destroyed by a covered loss, premiums are more expensive for homes with a high replacement cost.
• The construction materials used in your home. Homes built primarily of brick are less expensive to insure than frame homes.
• Where you live. Premiums will likely be higher for homes in areas with a high frequency of storms, such as tornados or hailstorms, or with a high incidence of theft.
• Availability of local fire protection. Homes with access to good fire protection services get better rates. If you live in an area with limited fire protection, your rates will be higher.
• Your claims history. Companies will charge more if you´ve filed claims in the past. Before filing a claim, it´s a good idea to ask your agent or the company´s underwriting department how it will affect your premium at renewal time. For less expensive losses, it may be cheaper in the long run to pay for repairs yourself rather than file a claim. This is especially true for repairs that wouldn´t cost much more than the amount of your deductible.
• Your credit score. Companies may consider your credit score when deciding whether to sell you a policy and what to charge you. However, a company cannot refuse to sell you a policy or cancel or nonrenew your policy solely on the basis of your credit.

Discounts
Discounts can help you save money on your insurance. Companies may offer premium discounts if you take steps to reduce the chances of a loss. Each company sets the amount of the discounts if offers to its policyholders. Some of the more common discounts are listed below:

• Impact-resistant roofs
• Noncombustible roof
• Marking personal property with an identifying number (inspection required)
• Age of house (companies set own standards)
• Premises in good condition (companies set own standards)
• Good claims experience for three consecutive years
• Other policies with same company or group
• House insured to full replacement cost
• Senior citizens discount
• Burglar, fire, and smoke alarm systems
• Automatic sprinkler systems
• Fire extinguishers
• Home security devices

Having Trouble Insuring Your Home?

Sometimes, finding adequate and affordable insurance can be difficult. If you are having difficulty finding a homeowners policy, you should:

• Remove Potential Risks
  
  You can make your home more insurable by changing things that insurance companies and agents interpret as signs of potential risk. Look around your home for problems that could cause damage or injury, such as a heavy tree limb hanging over your roof, loose porch railings, or cracks in your walkways.
• Watch Out for Crime
  
  Since theft is a common cause of homeowners claims, some insurers may not be willing to insure homes that seem vulnerable to crime. While you cannot stamp out crime by yourself, you can take a few steps to make yourself less vulnerable. These precautions could also lower your insurance premiums.
  • Call the crime prevention officers of your local police force. They can inspect your home and give you specific advice on protecting it.
  • Install dead bolts or other security devices on doors and windows.
  • Work with your neighbors to start a Neighborhood Watch Program. Your local police department has helpful information.
  • Install a burglar alarm that alerts the police or a security company.
  • Keep trees and shrubs trimmed, especially around windows and entryways. Overgrown shrubbery can provide hiding places for would-be burglars. Avoid parking cars on the street. Cars parked on the street are tempting targets for thieves and vandals and, like overgrown shrubs, can provide handy hiding places.
  • Keep the area around your home well-lit.
  • Permanently mark personal property with an identifying number to aid in identification if stolen items are recovered
• Maintain Your House and Yard
  
  Your home´s appearance is important when you´re looking for insurance. Since companies want to avoid losses from injuries or accidents, agents look for signs of poor maintenance. Agents might assume that a cluttered yard and faded paint suggest an unsafe home. The outside of your home will be inspected when you apply for insurance, often when you are not at home. Insurance companies have the right to cancel a policy within the first 60 days, and some may reject new customers because an inspection revealed a home in need of repair.
  • Fix any obvious signs of damage, such as rotting boards, sagging screens, or a loose front door.
  • Remove anything from your property that could easily cause an accident.
  • Replace a damaged or badly worn roof. Water stains on a ceiling tell an agent inspecting the inside of your home that you might have a future claim for water-damaged property.
  • Keep your yard clean and trim.
  • If your paint is peeling or faded, consider repainting.

Texans having trouble finding homeowners insurance from licensed companies have several places to turn for help. The following free programs may be able to help:


Texas FAIR Plan Association
The Texas FAIR Plan Association provides residential property insurance to qualified consumers. To be eligible for coverage, a consumer must have been denied insurance by at least two licensed insurance companies actually writing residential property insurance in Texas and may not have received a valid offer of comparable insurance from a company licensed in Texas. Coverage is the standard Texas HO-A policy form. For more information, visit the Texas FAIR Plan Association website or call the Texas Department of Insurance (TDI)

www.texasfairplan.org

1-800-979-6440

If you´re still unable to find insurance, your last resort might be to obtain insurance from a surplus lines carrier. Surplus lines carriers are out-of-state companies not licensed in Texas, but legally eligible to sell insurance on risks that licensed companies won´t cover. Surplus lines carriers generally charge more than licensed companies and often offer less coverage. Surplus lines carriers are not members of a guaranty association. This means that your claims might go unpaid if the surplus lines carrier becomes unable to pay its claims.
Before you buy from a surplus lines carrier, make sure there are no other options. Agents must make a "diligent effort" to find coverage with a licensed company before offering you a surplus lines policy. Ask which licensed companies turned you down, and why. Companies must justify rejections.

By Hamza HAsnain