Let me share with y'all a story about Louis, a good-hearted homeowner from Fort Worth. Now, Louis had a cozy little home that he cherished, nestled right in the heart of Cowtown. Like any wise Texan, he had a homeowners insurance policy because, as we all know, Texas weather can be as unpredictable as a bull at a rodeo. One spring, a hailstorm barreled through Fort Worth, and hailstones the size of pecans pelted down, rattling rooftops and leaving folks worried about the aftermath. Louis, seeing his roof battered, felt a wave of relief thinking about his insurance policy. After all, isn't that what insurance is for - peace of mind in such stormy times?
But here's where the tale turns as twisted as a country backroad. Louis' insurance policy, it turned out, was about as sturdy as a house of cards. He'd gone with a policy that, unbeknownst to him, was poorly constructed in an effort to keep his insurance premium down. The fine print in his policy was as clear as mud, and it had more gaps than a broken fence.
When he reached out to file his insurance claim, expecting help, he was met with a response colder than a winter in Amarillo. Turns out, his policy had limitations on roof damage for hail coverage. The insurance folks told him his roof's damage was due to "wear and tear" because of the roof being older than 10 years. Louis was stuck between a rock and a hard place. Repairing the roof out of his pocket was going to cost a pretty penny, and his homeowners insurance policy, which he'd counted on, was about as useful as a screen door on a submarine.
This story of Louis is a cautionary tale for all of us Texans. It's crucial to understand the ins and outs of your homeowners insurance policy. Remember, an insurance policy should be your sturdy shelter in a storm, not a tumbleweed blowing away when you need it most. So, do your homework, ask questions, and make sure your policy is solid as the Texas ground we stand on.
People buy insurance thinking that they have coverage on their home for mostly normal disasters that come along. When they go to claim, they find out too late that they didn't have coverage. We've seen some doozies. But there is one story that takes the cake!
What Are The Common Problems With Home Insurance Policies?
Thinking of Louis' story, there are common problems that we see on Texas home insurance policies that come into our office which generally revolve around three things. These are things we see other agents use to cut the price corners to persuade Texas homeowners to purchase a policy from them.
1. Wind & Hail Deductibles Set Too High
One of the most powerful pricing mechanisms on a Texas home insurance policy is that the Wind and Hail Deductible. This deductible has a major impact on the price you pay for the policy because hail is the number one claim type in the state of Texas. Because of the frequency of claim, the lower the deductible amount is set for Wind and Hail the more money the home insurance company is going to be required to shell out over time. As a result, insureds that are willing to shoulder more of the risk of those claims see substantial savings on premium payments.
However, when the deductible is set to a value that is five percent of the dwelling amount we run into problems. If the average home value is $250,000, the five percent deductible comes out to be $12,500. A roof on an average home of that value is going to cost between $10,000 and $15,000 dollars. That means that the insured will see no benefit, or very little, for this type of claim.
2. Lack Of Water Coverage
Another frequent type of claim on Texas home insurance policies is for water damage. These claims are commonplace for many Texas homeowners, and as a result produce persistent losses for the home insurance companies. Because of the numerous claims that can climb into the tens of thousands of dollars to repair homes, the home insurance companies will attempt to lower the claim costs by providing limited water coverage. This can take the form of a sub-limit for damage, or remove the coverage altogether. If your water heater explodes in your attic and you do not have coverage for the sudden and accidental discharge of water, you will not be excited that you saved 30% on your premium this year.
3. Your Roof Is Not Replacement Cost
A recent trend from some of the biggest Texas home insurance companies is to allow for your claim settlement on your roof to be either Actual Cash Value or Replacement Cost. The difference can be staggering for both premium payment and benefits received. Beware if you see the words "Roof Payment Schedule" as it is an Actual Cash value mechanism where depreciation will be applied to the value allotted for your roof when a claim check is issued to you after the claim is approved. That check may blow your mind.
For the claim amount to be determined, the adjuster will first determine the replacement value of the roof based on the size, slope, height, and shingle type. At that point, the depreciation factor will be applied. If you have a 30 year composition shingle and your roof is 15 years old, the depreciation factor will likely be 66% or more due to the extreme weather conditions we have here in Texas. That means you will receive 34% of the amount deemed needed for full replacement. But it gets better. Remember the wind and hail deductible from item one above? That amount will also be subtracted from the remaining 34% leaving you with pennies on the dollar to replace your damaged roof.
What About That Horrific Policy?
Back to our original story about Louis, the worst home insurance policy we have ever seen written for a Texan. Louis's home had a dwelling value of $635,000 for a 3,200 square foot home. The home was aggressively priced for reconstruction. Where the policy went really wrong is due to the following factors.
- Roof was considered Actual Cash Value!
- All water damage was excluded!
- There was no slab or foundation water coverage.
- The Personal Property was Actual Cash Value.
- And the Wind & Hail deductible was 5%.
This meant that the homeowner would never make a claim except for fire. All of the most frequent claims that do occur in Fort Worth were not going to be covered since they were actual cash value with deductibles over $30,000. Oh, and did we mention that the annual premium was almost $5,000? Sounds like a real gift, huh? The good news is that Insurance For Texans was able to get this homeowner into a policy that afforded all of the best coverage at an affordable price at almost half of that previous price prior to a claim.
Get TRUE Texas Home Insurance!
If you are looking to avoid this situation, we offer TRUE Texas Home Insurance here at Insurance For Texans. We make sure that your standard homeowners insurance policy is actually up to our standards. We work to make sure that your claims process is smooth and the type of coverage on your homeowners policy is appropriate for your life situation. We weed out the worst home insurance companies along with their really bad coverage for homes in Texas!
When you work with our local independent insurance agents who can work with your unique situation, you will be working with someone who understands the Texas landscape and what it means to live here. Since we work for you, and not some giant insurance company, your goal is to provide you standard coverage that works for Texans.
Click that button below to talk to our agents and get TRUE Texas Home Insurance today!