How to Ensure Your Homeowners Insurance Meets Your Needs

When you purchase a Texas homeowners insurance policy, you understandably may believe that you have adequate coverage to protect you from financial loss. As a homeowner, you may assume that your coverage will pay to repair or replace your home after a flood, fire or other similar type of event. You may also assume that your coverage will replace your home’s contents and that your coverage will pay for any liability issues that arise. However, many Texas homeowners were caught off-guard during the historical floods that damaged many areas of the state in May and June. While some had homeowners insurance 10-15 policies that covered all of their losses, others were surprised to learn that their homeowners insurance coverage did not cover their losses related the event at all.

Understand Your Existing Coverage
It can be devastating enough to deal with the fact that your home and all of its contents have been damaged or destroyed, but it can be even more devastating to learn that your homeowners insurance policy will not pay for your losses. It is not enough to simply have a homeowners insurance policy in place. There are different types of coverage, exceptions, limits and more that you need to know about. If you are like many homeowners in Texas, you may have purchased the minimum amount of coverage that your mortgage lender requires to keep your premium low. However, this minimum coverage may not be the coverage that is best for you. You should take time to learn more about the current coverage homeowners insurance policy, including the limits and exclusions. This will help you to determine where your vulnerabilities with coverage are:

Determining Your Needs
By reviewing your homeowners insurance policy and learning about vulnerabilities with your current policy, you can better determine if you need to add coverage or update it. Think about coverage options that can be added to the policy, such as flood or mold coverage. Also, determine if the current coverage amounts are sufficient for your needs. For example, if you have personal contents coverage of $30,000 for a 4,000 square foot home, this likely is not sufficient. You can speak with your insurance agent to learn more about coverage options and recommended coverage amounts.

Think About a Worst Case Situation
Many people who buy homeowners insurance think about the most common things that could happen, such as theft, fire or a Texas hailstorm. It may be relatively unlikely that these events would impact your home from year to year, so it may be even more unlikely that other events may occur. However, the Blanco River flood in Wimberley this year washed a 40-foot wave of water through the town, wiping away homes that were seemingly too far away from the river to be impacted by flooding. This was a historical flood of a magnitude that few could even dream about, but such events that make history can and do occur. These often are among the most devastating events for homeowners. With this in mind, it is important for homeowners to think about a worst case situation and to purchase coverage for those events as well.

It is understandable that you would want to keep your homeowners insurance premium as low as possible, and because of this, you may want to avoid being over-insured. However, paying a few dollars more per month to be over-insured may be far better than experience a significant financial loss because you are under-insured. Keep these points in mind as you review your coverage with your insurance agent.