Shopping smart: Tips for buying auto and home insurance

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Insurance coverages and rates vary from company to company. When buying insurance, it pays to shop around.

Texas has a Consumer Bill of Rights for auto and home insurance. Your insurance company will give you a copy when you get or renew a policy.

Shopping tips

• Use our shopping tools. HelpInsure.com lets you compare rates and coverages for companies that sell the most insurance policies in Texas. You can also compare policies and coverages on Office of Public Insurance Counsel's website.
• Compare apples to apples. Make sure you know what the policies you’re considering cover. A cheaper policy might provide less coverage.
• Consider factors other than price. An insurance company’s financial rating indicates how strong the company is financially. Its complaint index is a measure of its customer service. To learn an insurance company’s financial rating from an independent rating service and its complaint index, call our Help Line or use the Look up a company feature on our website.
• Buy only from licensed companies. If you buy from an unlicensed company, your claims could go unpaid. You can learn whether a company is licensed in Texas by calling our Help Line.
• Choose your deductibles wisely. A deductible is the amount you have to pay toward your claim before the insurance company will pay. For example, if you have a claim for $1,500 and a deductible of $500, the insurance company will deduct $500 from the claim amount and pay you $1,000. Policies with higher deductibles have lower premiums. But remember that if you choose a higher deductible, you’ll have to pay more out of pocket if you have a claim.
  Learn more: What to know about deductibles
• Decide how much coverage you need. Policies pay only up to their dollar limits. Make sure you have enough coverage to replace your home and property if you have a total loss. For auto insurance, make sure your limits are high enough to replace your car and to pay for any damages and injuries you cause.
• Ask your agent about discounts. Discounts help lower your premium. You might be able to get discounts for things like having more than one policy with the same company or having an alarm system in your home.

Learn more: How to shop smart for insurance | Your annual insurance review

Auto insurance basics

What does an auto policy cover?

There are eight basic auto insurance coverages. You must have liability coverage in Texas. If you still owe money on your car, your lender will require you to have collision and comprehensive coverage. You can choose whether to buy the other coverages.

1. Liability coverage pays to repair the other driver’s car if you caused the accident. It also pays the other driver’s and his or her passenger’s medical bills. Texas law requires you to have at least $30,000 of coverage for injuries per person, up to a total of $60,000 per accident, and $25,000 of coverage for property damage. This is called 30/60/25 coverage. You can choose to have more coverage. If you don’t have enough coverage to pay the other driver’s medical and repair bills, you might have to pay the rest out of your own pocket.
2. Collision coverage pays to repair or replace your car after an accident.
3. Comprehensive (other than collision) coverage pays if your car is stolen or damaged by fire, flood, vandalism or something other than a collision. It also pays if you hit an animal.
4. Medical payments coverage pays your and your passengers’ medical bills. It also pays if you’re hurt while riding in someone else’s car or while walking or biking.
5. Personal injury protection (PIP) is similar to medical payments coverage. But it also pays for things like lost wages and other nonmedical costs. All auto policies in Texas must offer PIP coverage. If you don’t want it, you must tell the company in writing.
6. Uninsured/underinsured motorist coverage pays if you’re hit by someone who didn’t have insurance or didn’t have enough to pay your medical and car repair bills. It also pays if you’re in a hit-and-run accident. Insurance companies must offer you this coverage. If you don’t want it, you must tell the company in writing.
7. Towing and labor coverage pays to tow your car if it can’t be driven. It also pays for labor to change a flat tire or jump-start your battery.
8. Rental reimbursement coverage pays for you to rent a car if yours is stolen or being repaired after an accident. Some policies also pay for taxis or ride-hailing services.

How do companies decide what to charge me?

Insurance companies use a process called underwriting to decide whether to sell you a policy and how much to charge you. The amount you pay for insurance is called a premium.

Most companies consider these things when deciding your auto insurance premium:

• Your age. Men under 25 and women under 21 usually have the highest rates. Rates go down as people reach middle age, but go up again after age 70.
• Your driving record and claims history. Insurance companies will charge you more if you’ve had accidents or gotten tickets.
• Where you keep your car. Rates are higher if you live in a city. This is because people in cities are more likely to have accidents or have their cars stolen than people in rural areas. Rates can also vary between ZIP codes in the same city.
• The kind of car you have. Collision and comprehensive rates are highest for luxury, high-performance, and sports cars. Rates are also higher for cars that cost more to repair.
• How you use your car. Your rates will be higher if you drive your car to and from work or use it for business.
• Your credit score. Some companies use your credit score to decide what to charge you. Use our Credit scoring and insurance page to find out which companies use credit scores to set rates.

Learn more: 10 steps to find the right auto insurance

Homeowners insurance basics

What does a homeowners policy cover?

Most homeowners policies in Texas include these six coverages:

1. Dwelling coverage pays if your house is damaged or destroyed by something your policy covers.
2. Personal property coverage pays if your furniture, clothing, and other things you own are stolen, damaged, or destroyed by something your policy covers.
3. Other structures coverage pays to repair structures on your property that aren’t attached to your house. This includes detached garages, storage sheds, and fences.
4. Loss of use coverage pays your additional living expenses if you have to move while your house is being repaired or rebuilt after being damaged by something your policy covers. Additional living expenses include rent, food, and other costs you wouldn’t have if you were still in your home.
5. Personal liability coverage pays if you’re legally responsible for injuring someone else or damaging their property. It also pays your court costs if you’re sued because of an accident.
6. Medical payments coverage pays the medical bills of people hurt on your property. It also pays for some injuries that happen away from your home, such as your dog biting someone at the park.

Learn more: 10 steps to find the right home insurance

Replacement cost vs. actual cash value coverage

Homeowners policies provide either replacement cost coverage or actual cash value coverage. To be fully protected, make sure your policy has replacement cost coverage.

• Replacement cost coverage pays to repair or replace your house and personal property at current prices. For example, say you bought a new roof 10 years ago and the current price for a new roof is $10,000. If you have to replace your entire roof after a storm, a replacement cost policy would pay for a new roof at today’s prices. If you have a $2,000 deductible, your company would pay $8,000.
• Actual cash value coverage pays replacement cost minus depreciation. Depreciation is a decrease in value because of wear and age. In the same example of the 10-year-old roof, the actual cash value might be $7,000. After your $2,000 deductible, your company would pay $5,000. You’d have to pay the rest of the cost of the new roof yourself. This means your total out-of-pocket costs for an actual cash value policy would be $5,000, compared with $2,000 for a replacement cost policy.

Learn more: Home policies: Replacement cost or actual cash value?

Do I need other coverages?

Depending on where you live and the type of property you own, you might need to buy other coverage:

• Flood insurance. Home policies don’t cover damage caused by floods. If your home is in a designated flood zone, your lender requires you to have flood insurance. But floods can happen anywhere. More than half of homes flooded by Hurricane Harvey were outside of designated flood zones. Talk to your home insurance agent about getting a flood policy from the National Flood Insurance Program. If your agent doesn’t sell flood insurance, call 800-427-4661 for help. Most flood policies have a 30-day waiting period before kicking in so don’t wait for an approaching storm before deciding to buy coverage.
• Windstorm and hail insurance. If you live on the Texas coast or in Harris County on Galveston Bay, your homeowners policy probably won't cover windstorm and hail damage. Talk to your agent about getting a wind policy. The Texas Windstorm Insurance Association (TWIA) also sells windstorm and hail coverage for coastal residents.
• Extra coverage (endorsements). If you want more coverage than your policy provides, you can buy more coverage. Most companies offer endorsements, or policy add-ons, that let you increase coverage. You should consider buying extra coverage if you own expensive jewelry, fine arts, or electronics. Other common endorsements cover backup of sewers or drains, damage to foundations, mold removal, and water damage from a plumbing, heating, or air conditioning system.
• Personal umbrella liability insurance. If you want more liability coverage than your home or auto policy provides, you can buy an umbrella policy.

Learn more: Do you have enough home insurance? | Do you need flood insurance?

How do companies decide what to charge me?

Most companies consider these things when deciding on your homeowners premium:

• Your home's age and condition. Companies can’t turn you down just because of your home's age or value, but they can charge you more.
• Your home's replacement cost. Houses with higher replacement costs have higher premiums.
• Construction materials. Premiums are higher for houses built completely of wood. They’re lower for houses built of brick or stone.
• Where you live. Premiums are higher in areas that have more storms or crime.
• Availability of local fire protection. Premiums are lower for houses that are close to fire stations.
• Your claims history. Your premiums might be higher if you’ve had claims in the past.
• Your credit score. Some companies use your credit score to decide what to charge you. Your premiums will be lower if you have good credit. A company can't turn you down based only on your credit. Use our Credit scoring and insurance page to find out which companies use credit scores to set rates.

Learn more: How your credit score can affect your insurance rates

Condo insurance basics

If you own a condo unit, you can buy insurance to protect your property. Condo insurance usually covers the contents of the unit that you own, like appliances, furniture, fixtures, and your personal belongings. It may also cover common property that you are responsible for under the rules of your condo association.

Most condo policies in Texas include these six coverages:

1. Dwelling coverage pays if your unit is damaged or destroyed by something your policy covers.
2. Personal property coverage pays if your furniture, clothing, and other things you own are stolen, damaged, or destroyed by something your policy covers.
3. Other structures coverage pays to repair structures you own or that are common property that you are partially responsible for under the rules of your condo association.
4. Loss of use coverage pays your additional living expenses if you have to move while your condo unit is being repaired or rebuilt after being damaged by something your policy covers. Additional living expenses include rent, food, and other costs you wouldn’t have if you were still in your home.
5. Personal liability coverage pays if you’re legally responsible for injuring someone else or damaging their property. It also pays your court costs if you’re sued because of an accident.
6. Medical payments coverage pays the medical bills of people hurt on your property. It also pays for some injuries that happen away from your home, such as your dog biting someone at the park.

Renters insurance basics

If you live in a rented house or apartment, you can buy renters insurance to protect your property. Renters insurance pays to repair or replace your clothes, furniture, and other things you own if they’re stolen or damaged.

The property owner’s insurance will pay to repair the house or apartment building if it’s damaged. But it won’t pay to replace your property.

What does a renters policy cover?

Most renters insurance policies include these four coverages:

1. Personal property coverage pays if your furniture, clothing, and other things you own are stolen, damaged, or destroyed by something your policy covers.
2. Loss of use coverage pays your additional living expenses if you have to move out while your house or apartment is being repaired or rebuilt after being damaged by something your policy covers.
3. Additional living expenses include things like food, rent, and other costs you wouldn’t have if you were still in your home.
4. Personal liability coverage pays if you’re legally responsible for injuring someone else or damaging their property. It also pays your court costs if you’re sued because of an accident.
5. Medical payments coverage pays the medical bills of people hurt on your property. It also pays for some injuries that happen away from your home, such as your dog biting someone at the park.

Renters insurance might duplicate other coverage. For instance, if you’re still a dependent, your parents’ homeowners policy might cover your personal property.

Learn more: Do you need renters insurance?

Having trouble finding insurance?

If you can’t find a company willing to sell you a policy, you might be able to get coverage through the Texas FAIR Plan Association or the Texas Automobile Insurance Plan Association (TAIPA). FAIR Plan and TAIPA coverage is more expensive that coverage from a standard insurance company.

Texas FAIR Plan Association

The Texas FAIR Plan Association sells homeowners and condo insurance. You can get FAIR Plan coverage if you can’t find a Texas-licensed company to insure you and at least two companies have turned you down.

To get Texas FAIR Plan Association coverage, talk to your agent.

TAIPA

You can get TAIPA coverage if two insurance companies have turned you down.

TAIPA sells liability, personal injury protection, and uninsured/underinsured motorist coverages. It doesn’t sell collision or comprehensive coverage or higher liability limits than state law requires.

To get TAIPA coverage, talk to your agent.

Your rights

An insurance company may not:

• turn you down or charge you more because of your race, color, religion, or national origin.
• turn you down or charge more because of your age, gender, marital status, geographic location, or disability unless the company can show that you’re a greater risk for a loss than other people it’s willing to insure.
• turn you down, charge you more, or treat you differently than other people in your rate or risk class unless the company can show that you’re a greater risk than others.

Learn more: 5 ways we can help you