Common Coverage Gaps Home Insurance Won’t Cover in Texas

Texas Home Insurance Coverage Gaps: Are You Fully Protected?

Home insurance in Texas is a fundamental aspect of responsible homeownership.

Whether your residence is newly built in a vibrant community like Humble or a long-established residence in Austin, the right policy safeguards against a wide variety of perils.

However, Texas homeowners must recognize that these policies are not exhaustive and often contain significant gaps in home insurance coverage that can lead to unexpected and costly out-of-pocket expenses.

Let’s explore some of the most common coverage gaps homeowners in Texas must be aware of when shopping for coverage:

Flood Damage Exclusions in Texas

Flooding continues to be a problem throughout many regions of Texas. There are tropical storms and hurricanes that come in from the Gulf and bring with them devastating storm surges and torrential rainfall.

Severe thunderstorms may also bring flash floods, which can overflow rivers and flood urban areas such as Houston and Dallas.

Unfortunately for many homeowners, a misconception is that flood events are a covered peril by home insurance policies. This can turn a loss into an even more frustrating nightmare for homeowners in the aftermath of a flood.

To stay protected from flooding, homeowners will need a separate flood insurance policy.

Even in cities that are prone to flooding, many homeowners forgo flood coverage. This is a risky option considering the average flood damage claim costs homeowners more than $42,000.

Combining this fact with FEMA reporting that around 25% of all flood damage-related claims come from homes outside of high-risk areas, you’ll see that flood insurance is important for every home in Texas.

Coverage C: Personal Property Insurance Limits

A standard homeowners insurance policy, known as HO-3, may be the most popular option for Texans, but that doesn’t mean it doesn’t have its own limitations.

While HO-3 policies provide a well-rounded approach to protecting your home, one notable protection can sometimes be overlooked, leading to gaps in coverage.

Known as Coverage C: Personal Property, homeowners can cover a variety of items, with typical limits of 25% to 50% of your home’s dwelling coverage limits.

This means that homeowners with damages exceeding such coverage will find themselves having to pay out of pocket to fully restore their loss.

Some of the most common items that can cause homeowners to exceed their coverage limits include:

• Antiques and Collectibles
• Art
• Designer fashion
• Electronics
• Instruments
• Jewelry and Precious Metals

Business Activities

Even before the outbreak of the COVID-19 pandemic, Americans were no strangers to the home office. Now, there are plenty of positions that are either full or part-time, remote, to keep companies moving forward.

But business supplies are not always covered by your home insurance policy, and even small side hustles can leave room for coverage gaps.

Whether you're running a tech startup from your Houston home, offering freelance services from your Dallas residence, or simply telecommuting a few days a week from your San Antonio abode, it's crucial to understand the extent of your homeowners insurance coverage for business-related items.

Consulting with your insurance agent to identify any potential gaps in your Texas home insurance related to business use and avoid unexpected financial burdens following a loss.

Sewage and Utility Lines

Our cable, electricity, WiFi, sewer systems, water lines, and gas lines are all critical components for the modern home.

However, don’t look to your home insurance policy should you run into an issue, because these perils are not covered.

A sewage backup is something no homeowner hopes to face. You may not expect to run into the issue, but besides being downright gross, a backed-up sewer can lead to losses that can reach over ten or twenty thousand dollars.

Likewise, utility lines that suffer damage are costly to restore, and it is your responsibility as the homeowner to restore such losses.

These unexpected issues can present major insurance gaps for Texans who do not have the right endorsements in place.

Home Renovation Projects

Performing home renovations is a great way to make your house a home, add value, or simply enhance your lifestyle.

There’s nothing wrong with responsible renovations to your home, however, homeowners can run into problems with their policies. Here’s how these coverage gaps typically occur:

• The cost of building materials and labor to construct homes continues to rise.
• While your policy may cover the cost of these materials before your project, it doesn’t mean your policy limits are as high as they need to be afterward.
• For example, if you replace your laminate countertops with a new one made of quartz.
• If you fail to let your home insurance carrier know about these changes, your coverage is likely inadequate to restore your new additions after a loss.

When making major changes to your home, always notify your home insurance provider so that there are no surprises and you can maintain the right coverages for your home’s value.

Keep in mind that certain renovations can introduce new risks that might not be covered under your existing policy or could even lead to policy cancellation.

For example, if you’re looking to cool off from the Texas sun and install an inground swimming pool without informing your insurer.

Because this is a significant increase in your liability risk, your premiums will be different, and your carrier will need to know about it.

Otherwise, when you submit a claim, it may not be covered, and you may even void your policy altogether depending on its terms and conditions.