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Homeowners Insurance

(En Español)

(February 2014)

Homeowners insurance pays to repair or replace your house and personal property if they’re damaged or destroyed by an event or occurrence covered by your policy.  These events or occurrences are called “covered losses.”

Note:  An insurance policy is a contract between you and your insurance company.  Read it carefully to understand exactly what it covers and the dollar limit of the coverage.   You should also understand your rights.  Texas has a Consumer Bill of Rights for homeowners and renters insurance.  Your company must send you the Bill of Rights when you get or renew a policy.

Texas Homeowners Policies   

Most homeowners policies in Texas include the following coverages:

  • Dwelling pays if your house is damaged or destroyed by a covered loss.
  • Personal property pays if the items in your house (such as furniture, clothing, and appliances) are damaged, stolen, or destroyed.
  • Other structures pays to repair or rebuild structures not attached to your house, such as detached garages, storage sheds, and fences.
  • Loss of use pays your additional living expenses (housing, food, and other essential expenses) if you must temporarily move because of damage to your house from a covered loss. Your policy will pay either a percentage of the amount of your dwelling coverage (typically 10 to 20 percent) or for a specific period after the loss (such as 24 months).
  • Personal liability pays to defend you in court against lawsuits and provides coverage if you are found legally responsible for someone else’s injury or property damage.
  • Medical payments pays the medical bills of people hurt on your property. It might also pay for some injuries that happen away from your home, such as your dog biting someone at the park. A basic homeowners policy pays $500 in medical bills, but you may buy up to $5,000 in medical payments coverage.

Types of Policies

Insurance companies in Texas may sell several types of policies. If a company offers you a policy with less coverage than you’d like, ask if other policies are available. You may also be able to buy additional coverage by adding endorsements to your policy.

The two types of policies sold in Texas are

  • All-risk policies (also known as a comprehensive coverage or open perils coverage). These policies offer you broad protection and cover all causes of loss unless the policy specifically excludes them.
  • Named perils policies (also known as specified perils coverage). These policies offer narrower protection than an all-risk policy and cover only the causes of loss specifically named in the policy.

Note about replacement cost and actual cash value:

  • Replacement cost is what you would pay to rebuild or repair your home, based on current construction costs. Replacement cost is different from market value and doesn’t include the value of your land. Ask your company if you aren’t sure how much it would cost to rebuild your house.
  • Actual cash value is what you would pay to rebuild or replace your property minus depreciation. Depreciation is a decrease in value due to wear and tear or age. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild.

To compare policies approved for sale in Texas, visit the Office of Public Insurance Counsel (OPIC) website at www.opic.state.tx.us.

Policy Coverages

Companies may exclude coverage for certain losses. Even the most comprehensive all-risk policy will exclude certain types of damage.

The following chart shows the most common types of losses covered or excluded from a homeowners policy:

Most Policies Cover Losses Caused by Most Policies Do Not Cover Losses Caused by
Fire and lightning Flooding
Sudden and accidental damage by smoke Earthquakes
Explosion Termites, insects, rats, or mice
Theft Freezing pipes while your house is unoccupied (unless you turned off the water or heated the building)
Vandalism and malicious mischief Losses if your house is vacant for the number of days specified by your policy
Riot and civil commotion Wear and tear or maintenance
Aircraft and vehicles Wind or hail damage to trees and shrubs
Windstorm, hurricane, and hail (this coverage may be excluded if you live on the Gulf Coast) Mold, except what is necessary to repair or replace property damage caused by a covered water loss
Sudden and accidental water damage Water damage resulting from continuous and repeated seepage

Policy Dollar Limits

A policy’s dollar limits are the maximum amounts your insurance company is required to pay if your house is destroyed. The Declarations Page at the front of your policy shows your policy’s dollar limits. Review your limits to ensure you have enough coverage to rebuild if your house is damaged or destroyed. Talk with your agent or a company representative if you have any questions about your insurance limits.

To receive full payment (minus your deductible) for a partial loss (such as a hail-damaged roof) most companies require you to insure your house for at least 80 percent of its replacement cost. If you insure your house for less than 80 percent of the full replacement cost, the insurance company will only pay a portion of the loss. Some companies might require you to insure your house for 100 percent of its replacement cost.

Coverage for Your Personal Property 

Homeowners policies provide coverage for your personal property (such as furniture, clothing, and household electronics) as a percentage of the amount of your dwelling coverage limits.  For example, if your company insures your personal property at 40 percent of your dwelling coverage and your house is insured for $100,000, your items are insured for up to $40,000. You might be able to buy more coverage by paying a higher premium.

Homeowners policies usually cap the coverage amounts for certain types of personal property, such as jewelry and art.  Tell your agent or company about any special items you have that you’d like to insure.  You may be able to buy additional coverage for these items for an extra premium.

Typically a homeowners policy will pay only the actual cash value of damaged, stolen, or destroyed personal property.

Inventory Your Property

Many people learn after a fire or storm that they didn’t have enough personal property coverage. Making a written inventory will help you decide how much insurance you need. It will also simplify claims.

Your inventory should list each item, its purchase date, value, and serial number. Photograph or videotape each room, including closets, open drawers, storage buildings, and garage. Keep the inventory and receipts for major items in a fireproof place or another location. Use TDI's Home Inventory Checklist to create your inventory.

Other Types of Residential Property Policies

  • Renters insurance. A landlord’s insurance doesn’t cover a renter’s personal property. Renters insurance covers your belongings, provides liability protection, and pays additional living expenses if a fire or other event stated in your policy forces you to move temporarily.
  • Condominium insurance. Condominium insurance covers your belongings, provides liability protection, and pays additional living expenses. It also covers damage to improvements, additions, and alterations to the condo.
  • Townhouse insurance. Townhouses may be insured by either an individual homeowners policy or an association master policy. If a townhouse is owner-occupied and the townhouse association doesn’t have a master policy on the building, you can purchase a homeowners policy on your individual unit. If the association has a master policy, you should get a Texas tenant homeowners policy to insure your personal property.
  • Mobilowners insurance. Mobile homes without wheels and resting on blocks or a permanent foundation may qualify for a homeowners policy. However, most mobile homes are insured by a mobilowners policy. A mobilowners policy is an auto policy that covers mobile homes used as residences. Mobilowners policies typically offer limited coverage.
  • Farm and ranch insurance. Farm and ranch owners policies insure homes outside city limits on land used for farming and raising livestock. You can pay extra to get coverage for certain farm equipment and outbuildings.

Other Types of Insurance You Might Need

Windstorm and Hail Insurance

Most homeowners policies don’t cover windstorm and hail damage if you live in any of the 14 coastal counties or parts of Harris County on Galveston Bay. The Texas Windstorm Insurance Association (TWIA) is the state’s insurer of last resort for windstorm and hail coverage. You may 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 may no longer change or buy windstorm coverage.

If you plan to build, add to, or renovate a home or other structure and want to get or maintain TWIA coverage, you must get a certificate of compliance (WPI-8) by having your property inspected during the construction phase. A TDI windstorm inspector can conduct an inspection for free, or you may use a Texas licensed professional engineer appointed by TDI. Ask your agent how to get an inspection. For more information about windstorm coverage, contact TWIA at 1-800-788-8247 or online at www.twia.org.

For more information or questions about TWIA claims, call TDI’s Coastal Outreach and Assistance Services Team (COAST) program at 1-855-35COAST (1-855-352-6278) or visit www.tdi.texas.gov/consumer/coast.html.

Flood Insurance

Homeowners policies don’t cover flood damage.   To protect yourself from losses caused by most flooding, you may buy a separate flood insurance policy from the National Flood Insurance Program (NFIP).  The Federal Emergency Management Agency (FEMA) runs NFIP. If your property is in a special flood hazard area, your lender will require you to have flood insurance. A special flood hazard area has a 1 percent chance of being flooded in any given year.

Local insurance agents sell NFIP flood policies and can tell you about the program in your area. For more information, call NFIP at 1-800-427-4661 or online at www.floodsmart.gov/floodsmart/.

TWIA flood insurance requirement. Some Gulf Coast residents must buy flood insurance to be eligible for a TWIA policy. The requirement applies to you if

  • you constructed, altered, remodeled, or enlarged your property (to the extent that a certificate of compliance is required) on or after September 1, 2009
  • any part of your property is in flood zones V, VE, or V1-V30 as defined by NFIP
  • flood coverage is available from NFIP.

Property repairs are excluded from the requirement. Repair is defined as the reconstruction or restoration of a structure that is damaged or deteriorated.

To view flood maps, visit FEMA’s website at www.floodsmart.gov/floodsmart/.

Review the Homeowners, Flood, and Windstorm Policies Comparison to see the differences between homeowners, flood, and wind and hail insurance.

Earthquake Insurance

Insurance companies offer separate policies that cover damages caused by earthquakes. The cost is low because earthquakes are rare in Texas.

Extra Coverage (Endorsements)

If you want more coverage than the policy offers, you might be able to add an endorsement to your policy for an extra premium.

Some of the most common endorsements expand or increase coverage for jewelry, fine arts, or camera equipment.  Other common endorsements provide coverage for damage originally excluded by the policy.

The following are common endorsements you can consider adding to your policy:

  • Backup of sewers or drains. Pays for damage caused by sewer or drain backup.
  • Damage to foundation or slabs. Pays to repair a foundation or slab up to certain limits.
  • Extended or additional dwelling replacement coverage. Pays up to a certain amount if your policy doesn’t pay enough to rebuild your home.
  • Law or ordinance coverage. Pays if repair costs are higher because of local building codes or ordinances.
  • Mold remediation. Pays for mold remediation up to a certain amount.
  • Replacement cost-dwelling. Pays replacement cost after you repair or replace your property.
  • Replacement cost-personal property. Pays replacement cost after you repair or replace your property.
  • Water damage from a plumbing, heating, or air conditioning system. Pays for sudden and accidental water damage. Most policies don’t provide coverage for continuous and repeated water damage.

Personal Umbrella Liability Insurance

If you have assets to protect and want more liability coverage than a homeowners policy provides, you can buy a separate umbrella policy. Make sure the agent or company fully explains the coverage because policies are different from company to company.

Shopping for Homeowners Insurance    

Rates and coverage vary from company to company, so it’s a good idea to shop around. The following tips can help you find the best deal for your money:

  • Decide before shopping which coverages and coverage amounts you need.
  • Consider higher deductibles. Your deductible is the amount you must pay 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.
  • Ask several companies and agents for price quotes because rates vary. When comparing rates, make sure they are for the same coverages. You can view sample rate comparisons on our website at www.HelpInsure.com.
  • Ask your agent whether you qualify for discounts.  Insurance companies may offer policy discounts that will lower your premium.
  • 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, complaint index, and license status. The financial rating indicates a company’s financial strength and stability, and the complaint index is an indication of its customer service record. Buy only from licensed companies and agents. It is against the law to sell insurance without a license in Texas. Learn more about a company, including its licenses status, complaint history, and financial rating from an independent rating organization by calling TDI’s Consumer Help Line at 1-800-252-3439 or 512-463-6515 in Austin or by visiting the TDI website at www.tdi.texas.gov.

Review your Policy

After you buy a policy, review it to ensure that everything is correct. Review the following items listed on the declarations page:

  • Your name and the property location.
  • Policy period. This is the date the policy is in effect. Your mortgage company or lienholder will use this date to ensure that you have insurance on your property.
  • Coverages. This section lists your property and liability coverages and limits. Consider whether your property coverage limits are high enough to replace your house and personal property if they are damaged or destroyed. You can increase property and liability coverages if you don’t think they’re high enough.
  • Other coverages or endorsements. Any increases in coverage or additional coverages will be listed here.
  • Deductibles. The deductible is listed as a dollar amount and a percentage for each type of coverage. The deductible is the amount you must pay before the insurance company will pay. For example, if you have a claim for $1,000 and a deductible of $300, the insurance company will automatically deduct $300 from the amount it will pay you.
  • Discounts. All the discounts you’re receiving will be listed. Ask your company if there’s a discount you think you should be getting.
  • Policy premium. This is the cost of your policy after your discounts.
  • Rating information. This section describes what factors they used to decide on your premium.
  • Mortgagee. Make sure the name and address of your mortgagee are correct.

Understanding Rates and Premiums    

Insurance companies file their rates with TDI but don’t need approval before using them. This system is called file and use.  Texas law requires insurance companies to offer rates that are reasonable, adequate, not excessive to the risks for which they apply, and not unfairly discriminatory.  If TDI determines that a company’s rates don’t meet these requirements, we may require the company to pay refunds to the policyholders it overcharged. Companies may appeal TDI’s decisions.

Factors that Affect Your Premium

Companies use a process called underwriting to decide whether to sell you a policy and what rate to charge you.  Each company must file its underwriting guidelines with TDI and send us updates if the guidelines change.  Companies use various factors to determine premiums. These include:

  • Your home’s age and condition. Companies may refuse to insure homes in poor condition, but they may not deny coverage solely because of a home’s age or value.  However, most companies will charge you more if you are insuring an older house. Your home’s replacement cost. If you have a replacement cost policy, your policy will pay to rebuild your home if it’s destroyed. Your premiums will increase in relation to the amount of your replacement cost.
  • 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 in areas with a higher crime or high storm activity.
  • Availability of local fire protection. Premiums are usually lower for homes in areas with access to good fire protection.
  • Your claims history. Companies use your claims history to determine what to charge you for your coverage. Your claims history includes both the type and the number of claims filed.
  • 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 can’t refuse to sell you a policy or cancel or nonrenew your policy solely because of your credit score. Companies that use credit scoring must file their credit scoring models with TDI. You may learn more about how companies use credit scoring on HelpInsure.com. It’s a good idea to look at your credit report each year and correct any errors.

Discounts

Discounts can help you save money on your insurance. Most companies offer premium discounts if you reduce the chances of a loss. Each company sets the amount of the discounts it offers. You might be able to get a discount for having

  • an impact-resistant or noncombustible roof
  • burglar, fire, and smoke alarms
  • an automatic sprinkler system
  • fire extinguishers
  • other policies with same company or group
  • no claims for three years in a row.

You also might be able to get a discount if you have a newer home, if you’re over 65, if you keep your home and property in good condition, if you insure your home to full replacement cost, and if you mark your personal items with an identifying number.

Having Trouble Insuring Your Home?     

If you are having trouble finding a homeowners policy, it might help to take steps to reduce your chances of a loss. Here are some things you can do:

Remove Potential Risks

You can make your home more insurable by taking care of the things that insurance companies and agents see as signs of potential risk. Look around your house 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.

Take Precautions against Crime

Since theft is a common cause of homeowners claims, some insurance companies might not be willing to insure homes that seem vulnerable to crime. Here are some things you can do to help you protect yourself and your property:

  • Call the crime prevention officers of your local police department. They can inspect your home and tell you how to better protect 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 can give you some information to get started.
  • Install a burglar alarm that calls the police or a security company.
  • Eliminate hiding places for thieves and vandals. Keep trees and shrubs trimmed, especially around windows and entryways.
  • Don’t park cars on the street. Cars parked on the street are tempting targets for thieves and vandals and, like overgrown shrubs, can be hiding places.
  • Turn on outside lights at night.
  • Write an identification number on your personal property to help identify it if it’s stolen.

Keep Your House and Yard in Good Condition

Someone from the insurance company will inspect your home when you apply for insurance.  A cluttered yard and faded paint could suggest an unsafe home or existing damage.  Insurance companies may charge you a higher premium, restrict or limit your coverage, or even refuse to insure you based on the company’s inspection.  Take the following steps to improve your home’s safety and appearance:

  • 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 and landscaping clean and trim.
  • If your paint is peeling or faded, consider repainting.

Other Options for Insuring Your Home

Texans having trouble finding homeowners insurance may have other options for buying coverage. The following programs may be able to help:

HelpInsure.com

HelpInsure.com is a free and secure service of TDI and the Office of Public Insurance Counsel to help Texans shop for homeowners, condo, renters, and automobile insurance. You can

  • view sample rates for companies selling  insurance in your area
  • learn more about policy coverages
  • learn more about companies, including complaint index, financial rating, loss ratios, market share, how they use credit scores, and what discounts they offer.

You can either contact companies yourself or fill out a questionnaire that companies and agents can use to call you with a rate quote.

For more information or to sign up, visit the HelpInsure.com website or call the Consumer Help Line at 1-800-252-3439.

Texas FAIR Plan Association

The Texas FAIR Plan Association provides basic homeowners insurance to eligible consumers. To be eligible for coverage, you must have been denied insurance by at least two licensed insurance companies writing residential property insurance in Texas and may not have received a valid offer of comparable insurance from a company licensed in Texas.

For more information, contact your agent or the Texas FAIR Plan at 1-800-979-6440 or www.texasfairplan.org.

Surplus Lines Carriers

If you’re still unable to find insurance, your last resort might be to get insurance from a surplus lines carrier. Surplus lines carriers are out-of-state companies not licensed in Texas, but legally eligible to sell insurance to insure risks that companies in the standard market are unwilling to insure. Surplus lines carriers usually charge more than licensed companies and offer less coverage.

Surplus lines carriers aren’t members of a guaranty association. This means that your claims might go unpaid if the surplus lines carrier becomes unable to pay its claims.

Agents must make a good 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 tell you why they turned you down.

Losing Your Insurance    

Knowing your rights can help if you are rejected for homeowners insurance or lose your coverage. If you request it, a company must explain in writing its reason for declining, canceling, or not renewing your policy. You may complain to TDI if you think a company improperly denied, canceled, or nonrenewed your policy.

CLUE®

Many companies use the Comprehensive Loss Underwriting Exchange (CLUE) to review your claims history. CLUE reports list the property insurance claims history of people and houses – regardless of who owned them – for the last seven years.

Companies are only allowed to report information if someone filed a claim. Federal law gives you the right to challenge wrong information. If an insurance company based part of its decision to deny you coverage on a CLUE report, you can get a free copy of the report by calling LexisNexis Personal Reports at 1-866-527-2600 or by visiting its website at https://personalreports.lexisnexis.com/index.jsp.

Before calling, get the CLUE reference number from the company’s denial letter or from the company. Using the reference number will speed the process by making sure you are requesting the right report. CLUE is a registered trademark of Equifax Inc.

Cancellation and Nonrenewal

Cancellation means either you or the insurance company stops coverage before your policy’s normal expiration date.  If either you or the company cancels your policy, the company must refund any unearned premium. Unearned premium is the amount you paid in advance that didn’t buy coverage. For example, if you paid an annual premium of $600 and you cancel your policy after one month, the company owes you $550 in unearned premium.

A company must give you 10 days notice before it cancels your policy. A company may only cancel your policy within the first 60 days if it finds an undisclosed additional risk of loss that is not the subject of a prior claim. If a company cancels your policy in the first 60 days, it must give you 30 days notice.

A company may not cancel your policy after 60 days, unless there is fraud, increased risk, or nonpayment of premium.

Nonrenewal means a company refuses to renew your policy when it expires. A company must give you written notice at least 30 days before your policy’s expiration date if it plans to nonrenew your policy or change your coverages. If the company doesn’t notify you in writing in the required time, it must renew the policy at your request.

A company may nonrenew your policy if your property is in bad condition. It may also require you to make repairs to your home before renewing your policy. Generally, companies will give you six months to a year to make repairs. If the repairs are needed because of a storm or other covered loss, the company must pay for the work (minus your deductible). If the repairs are required because of deterioration or normal wear and tear – a worn-out roof, for instance – you are responsible for paying.

A company may also nonrenew your policy if you file three or more nonweather-related claims in three years. If your company doesn’t notify you after a second nonweather-related claim, it can’t refuse to renew your policy because of a third claim. A company can’t use the first two appliance-related claims to determine the number of nonweather-related claims for the purposes of nonrenewing your policy.

A company may not nonrenew your policy if you file a claim for a loss your policy doesn’t cover. Instead of nonrenewal, the company can charge an added premium called a surcharge. A company can add a surcharge for filing two or more nonweather-related claims in the previous policy year.

If you move out of your house and it remains vacant for 60 days or longer, most policies automatically stop coverage. The policy’s liability coverages will continue, however. The vacancy also could cause the company to refuse to renew the policy when it expires.

Your Rights against Unfair Discrimination

Insurance companies may not

  • deny, refuse to renew, limit, or charge more for coverage because of your race, color, religion, or national origin.
  • deny, refuse to renew, limit, or charge more for coverage because of your age, gender, marital status, geographic location, disability or partial disability, unless the refusal, limitation, or higher rate is “based on sound underwriting or actuarial principles.” Sound underwriting or actuarial principles means the company would have to show evidence that your home presents a greater risk for a loss than other homes it is willing to insure.
  • unfairly discriminate between people of the same rate class and with essentially the same risk in its rates, policy terms, and benefits, or in any other manner unless the refusal, limitation, or higher rate is “based on sound actuarial principles.”
  • refuse to insure a home based only on its age or low value. Companies may offer discounts for newer homes and require updates to the wiring, plumbing, and heating systems before agreeing to insure an older home.

If You Have a Claim

Texas law sets deadlines for insurance companies to act after you’ve filed a claim. Your company must

  • Respond within 15 days after it receives your claim in writing. It will probably ask you to document your loss.
  • Accept or reject your claim within 15 days after you submit any documents it asked for. If the company rejects your claim, it must explain its reasons in writing.
  • Send your check or bank draft within five business days after it agrees to pay your claim.

Exceptions:

  • A company that needs more time can take 45 days to make a decision if it sends you a notice explaining the delay.
  • A company that suspects arson has 30 days after receiving the required paperwork to either accept or reject a claim.
  • TDI can give companies an extra 15 days after a major natural disaster.
  • Surplus lines carriers have 20 days to pay your claim after agreeing to do so.
  • A company that takes too long to pay is liable for your reasonable attorney fees plus damages equal to 18 percent of your claim if you sue and win. In an insurance claim lawsuit, the insurance company has the burden of proving it wasn’t obligated to pay.

If you are financing your home, your insurance company may require your lender to sign or approve your claim check. When this happens, the lender must act within 10 business days after receiving the request. Failure to act within this time period could result in a $500 civil penalty. Complaints about lenders failing to process claim payments should be directed to the Texas Attorney General’s Office at 1-800-252-8011 or online at www.texasattorneygeneral.gov/.

Claim Tips

To make the claim process run smoothly and to protect your rights, follow these steps:

  • Know your coverage. Your policy’s dollar limits, coverages, deductibles, endorsements, and exclusions appear on your policy’s declarations page. If you need help, ask your agent or company representative. If you have a loss, tell your agent or insurance company as soon as possible. Also report losses involving theft or crime to the police.
  • Make a list of your damaged property. If possible, photograph or videotape the damage before making any repairs.
  • Make only temporary repairs to protect your house and belongings. The insurance company may deny your claim if you make permanent repairs before it inspects the damage. If you are not sure whether a repair is considered permanent, contact the insurance company before beginning repairs. Your policy will cover the cost of these repairs and for storing personal belongings. It is important to only make temporary repairs.
  • Keep receipts. For personal property claims, you must provide evidence that you bought the replacement items. If you bought materials for temporary repairs, receipts will help you get reimbursed quickly.
  • Try to be there when the insurance company’s adjuster inspects your home. You may have your contractor or builder with you. Your contractor or builder may discuss estimates or technical specifications with the adjuster or your insurance company.
  • If you have to move because of a disaster, make sure your address is visible. Leave a sign with your temporary address, phone number, and the name of your insurance company.

Claim Process

Proof of loss. Within 15 days after you report your loss, the company may request a signed, notarized proof-of-loss form. The company will use the form to decide the value of your claim. In most cases, the company will ask you to estimate the replacement cost of any damaged or lost personal property and the cost of repairing your home.

Use these tips when determining your estimate:

  • Make your list as complete and as detailed as possible.
  • Talk to local contractors or retailers to get pricing information.
  • Include sales tax in your cost estimates.
  • Ask whether you should use exact costs or round numbers to the nearest dollar.
  • Include small items such as kitchen utensils or clothing accessories.
  • Include photos and receipts.
  • Keep a copy of the estimate and any supporting documents for your records.
  • The adjuster will prepare a final estimate of the cost to repair your home and repair or replace any personal belongings. The insurance company’s offer is based on this estimate.

Disputes. If you disagree with the adjuster’s final estimate, tell the company why. The company may have overlooked something and may make adjustments. If you still disagree, you can use the appraisal process or hire a public insurance adjuster.

Appraisal. The appraisal process is only available in disputes regarding the amount of your claim. It can’t be used for settling disputes about whether the damage is covered by the policy.

The appraisal process begins with you and the company each hiring an appraiser. The two appraisers then choose a third appraiser as the umpire. Your appraiser and the company’s appraiser make their own estimates of your loss. If they are different, the umpire makes the final decision, which is binding on both you and the company. You are responsible for the expenses of the appraiser you hire and for half of the umpire’s expenses.

Public insurance adjusters. Public insurance adjusters charge fees to help negotiate claim settlements with insurance companies. The public adjuster’s fee is deducted from your settlement.

The public adjuster’s fee may be a flat fee, an hourly rate, or a percentage of the amount paid in the claim settlement. The contract you have with the public adjuster must include the method for calculating their commission and a statement that the commissions will not exceed 10 percent of the claim.  In some instances, a public adjuster is entitled only to reasonable compensation for time and expenses.

Public adjusters aren’t allowed to give legal advice and participate in the reconstruction or repair of your damaged property. They also aren’t allowed to engage in any activity that would be a conflict of interest.

A public adjuster must be licensed by TDI. To learn whether a public adjuster is licensed, call TDI’s Consumer Help Line or use the Agent Lookup feature on our website.

Payment. Once the company agrees to pay all or part of your claim, it must pay within five business days. If you don’t get your check within five days, contact your agent or company. If you think that the company is delaying payment on purpose, contact TDI for help.

Most companies pay homeowners claims with two checks. The first is issued after the adjuster looks at your loss and is for the estimated cost of repairs, minus depreciation and your deductible. The company will issue the second check for the rest of your claim after it receives the contractor’s bill for the finished job, as long as the repairs or replacements are completed within 365 days of the date of loss. You may submit a written request for an additional 180 days extension.

Note: TWIA policies issued or renewed after September 27, 2011, don’t have the same claims deadlines as other homeowners policies. If you have a TWIA policy, read your policy or talk to your agent to understand the claims process.

Getting Help from TDI

Companies may be penalized if they don’t settle claims fairly and on time. If you think an insurance company has treated you unfairly, first contact your company and try to resolve the problem. Most companies operating in Texas are required to have a toll-free telephone line to provide customer assistance. The number should be listed in your policy.

If you are unable to resolve the problem yourself, contact TDI to file a complaint. You may file an insurance-related complaint with TDI several ways:

For More Information or Assistance

For answers to general insurance questions, for information about filing an insurance-related complaint, or to report suspected insurance fraud, call the Consumer Help Line at 1-800-252-3439 or 512-463-6515 in Austin between 8 a.m. and 5 p.m., Central time, Monday-Friday, or visit our website at www.tdi.texas.gov.

You can also visit HelpInsure.com to help you shop for automobile, homeowners, condo, and renters insurance, and TexasHealthOptions.com to learn more about health care coverage and your options.

For printed copies of consumer publications, call the 24-hour Publications Order Line at 1-800-599-SHOP (7467) or 512-305-7211 in Austin.

To report suspected arson or suspicious activity involving fires, call the State Fire Marshal’s 24-hour Arson Hotline at 1-877-4FIRE45 (434-7345).

The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company.



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Translation by WorldLingo


Translation by WorldLingo