Homeowners insurance is a necessity for anyone who owns a home in Texas. As one of the many parts of personal insurance coverage, homeowners insurance protects an owner’s structure and property against various perils and damage. Insurance rates can vary based on the type of coverage purchased from a homeowners insurance agency, the location and type of home, and other factors.

Types of Home Insurance Policies

Homeowners in Texas have a choice of two different types of homeowners insurance policies: all-risk or named perils. As the name suggests, all-risk policies offer coverage for all risks unless a peril is specifically excluded. Such exclusions for a specific peril may possibly be covered with an added rider. Named perils policies cover only perils named in the policy.

Determining Home Insurance Rates

Texas home and personal insurance rates are all monitored by the Texas Department of Insurance (TDI). Texas uses what is called a file and use system. This allows insurers to file for a rate increase, implement it, then wait for TDI to either approve or reject it. Insurers must provide adequate coverage for the risks being covered and be available to everyone without any type of discrimination. Companies document their rates and methods for determining policy premiums with TDI, then use underwriting to examine an applicant’s specific policy request to determine whether a policy can be offered and at what rate.

There are many factors that a homeowners insurance company uses to determine homeowners insurance premiums, since every home and every customer is different. Those variables include:

  • Age and Condition of Home - Generally speaking, an older, not well-maintained home will have a higher rate to insure that home. Insurance companies can also decline to insure certain homes based on poor condition.

  • Home Location - In areas with frequent storm activity or higher crime rates, home insurance premiums are usually higher than areas where these risks are lower.

  • Construction Materials - Frame homes cost more to insure than brick homes, as brick homes are thought to be more resistant to fire damage and certain other perils.

  • Proximity to Fire Department - Proximity to local fire stations is used to determine insurance rates,  with homes located further from fire stations facing higher premiums.

  • Applicant’s Claim History - Past claim history can also affect insurance premium rates. Homeowners insurance services examine past claim types and amounts in determining whether an applicant could be a higher risk, in which case premiums are generally higher.

  • Applicant’s Credit Score - Although insurance companies cannot avoid selling a policy based on an applicant's poor credit rating, credit score is used to gain a general idea of the applicant and whether they represent a specific risk to an insurance service.

Lowering Home Insurance Premiums

There are a number of ways homeowners can obtain discounts on their insurance premiums. Some of these ways include the use of smoke detectors, sprinkler systems, fire extinguishers, security systems, impact-resistant roofs, and other specific safety items. Homeowners should check with their homeowners insurance services to see how they can reduce their insurance premiums.

Using these basic points, a homeowners insurance agency will calculate insurance rates that reflect the actual risk presented and the most affordable way to provide protection for a home. Even when premiums seem expensive, there is often an valid reason why homeowners insurance costs what it does. Homeowners with rating questions or want to learn how to get the most affordable rates on home and personal insurance in Texas should discuss their needs with an experienced homeowners insurance company!

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