Nielsen Insurance Group: FAQ

Frequently Asked Questions

Homeowners Insurance
Homeowners insurance protects you from losses caused by storms, fire, theft, and other events outlined in your policy. It is important to know what's in your policy. This publication gives you general information about homeowners insurance, but it is not a substitute for the policy itself. Make sure you read your policy carefully and understand your specific coverages. It's also important to know your rights. Texas has a Consumer Bill of Rights for homeowners and renters insurance. Your company must send the Bill of Rights with your policy or renewal.

Don't wait until you have a claim to review your policy and to know your rights.

Texas Homeowners Policies
You can buy a dwelling policy that covers only the structure of your house. Or, like most Texans who own their homes, you can buy a homeowners policy, which combines five different types of coverage:

Dwelling - pays for damage to your house and any outbuildings, such as detached garages and storage sheds.

Personal property - pays when household items, including furniture, clothing and appliances, are damaged, stolen, or destroyed.

Liability - protects you against financial loss if you are found legally responsible for someone else's injury or property damage. A homeowner's policy automatically provides $25,000 in coverage. You can buy up to $1 million in coverage for an extra premium.

Medical payments - pays medical bills for people hurt while on your property. It also pays for some injuries that happen away from your home, such as your dog biting someone. A basic homeowners policy pays $500 in medical bills. You can pay extra and get up to $5,000 in medical payments coverage.

Loss of use - pays living expenses if your home is too damaged to live in during repairs. The most common policy pays up to 20 percent of the amount for which your house is insured.

Types of Homeowners Insurance Coverages
Companies can sell several types of policies in Texas, each with a different level of coverage.

HO-A policies provide extremely limited actual cash value coverage of your home and its contents. Only the types of damage specifically listed in the policy are covered.

HO-A amended or HOA+ policies provide more extensive coverage than the base HO-A policy but less coverage than an HO-B.

HO-B policies provide replacement cost coverage for most types of damage, except those specifically excluded in the policy.

HO-C policies provide the most extensive coverage, but are more expensive than other types of policies.

National policies are policies of national insurance organizations or large national companies that the Commissioner of Insurance has approved for sale in Texas. Coverage provided by these policies may differ considerably from one another and from the coverage provided in standard Texas homeowners' policies.

Generally, HO-B policies provide the most coverage for the price, but some companies may not offer the HO-B policy.
Most Policies Cover Losses Caused by:

Fire and lightning

Damage by aircraft & vehicles

Vandalism and malicious mischief

Theft

Explosion

Riot and civil commotion

Smoke damage

Windstorm, hurricane, and hail

Most Policies Do Not Cover Losses Caused by:

Flooding

Earthquakes

Termite damage

Damage by insects, rats, or mice

Freezing pipes while your house is unoccupied (unless you turned off the water or heated the building)

Wind or hail damage to trees and shrubs

Losses if your house is vacant for 60 days or more

Wear and tear or maintenance
Companies may exclude coverage for certain losses. For example, if you live on the Gulf Coast, you might receive an endorsement that excludes coverage for wind and hail damage. In some areas with a history of hail storms, some companies provide only actual cash value coverage for roofs instead of full replacement cost. Actual cash value pays for damage minus depreciation on the roof, depending on its age and condition.

Most policies will not cover mold remediation beyond that necessary to repair or replace property damaged by a water loss otherwise covered by the policy. The HO-A policy offers no coverage for mold remediation or for damage caused by sudden and accidental water leaks, although some companies may offer that coverage as an endorsement to the base HO-A policy. If you have an HO-B policy, you will be able to buy additional coverage in increments of 25 percent, 50 percent, and 100 percent of your policy's limits to cover mold remediation. If you have questions or concerns about how a mold claim is being handled, or you need information about how to minimize mold losses, ask your insurance company for a set of guidelines regarding mold claims.

Maintain Adequate Coverage
Buy enough coverage to avoid a major financial loss if you have a fire or other loss. This means keeping a realistic dollar amount of coverage on your house.

Replacement Cost Coverage of Your House
Texas standard HO-B and HO-C policies provide replacement cost coverage for your house, up to your policy's dollar limits. 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. It does not include the value of your land.

To receive full payment (minus your deductible) for a partial loss, such as a hail-damaged roof, you must 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 pay only part of the expense of a partial loss.

Unless you buy an endorsement increasing your coverage, HO-A policies only provide actual cash value coverage. Actual cash value is the replacement cost of your property minus depreciation.

Replacement Cost Coverage for Your Personal Property
Homeowners' policies automatically cover household contents - furniture, clothes, appliances, etc. - up to 40 percent of the amount your house is insured for. This means if you insure your house for $100,000, its contents are insured for up to $40,000. You can get more coverage by paying a higher premium. This automatic coverage pays only the actual cash value of damaged, stolen, or destroyed household goods. Actual cash value is an item's replacement cost, minus depreciation.

You may be able to pay extra and buy replacement cost coverage that ignores depreciation and pays for a new item like the one you lost.

Replacement cost coverage gives you more protection than actual cash value coverage. The following example illustrates why:
A burglar steals your six-year-old television set. With actual cash value coverage, you get only what you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company pays to replace your TV with a new set similar to the stolen one. Companies generally want proof you replaced an item before paying your claim in full. However, if you have an HO-B policy, the company must advance you the first $1,500, plus the depreciated value of any other damaged property, without requiring proof of replacement. After that, the company must pay you within five business days after receiving proof you replaced, restored, or repaired the property. A company can offer to replace the items instead of paying cash, but the choice is yours.

© Copyright Nielsen Insurance Group 2001. All rights reserved.

Homeowners Insurance
Homeowners insurance protects you from losses caused by storms, fire, theft, and other events outlined in your policy. It is important to know what's in your policy. This publication gives you general information about homeowners insurance, but it is not a substitute for the policy itself. Make sure you read your policy carefully and understand your specific coverages. It's also important to know your rights. Texas has a Consumer Bill of Rights for homeowners and renters insurance. Your company must send the Bill of Rights with your policy or renewal.

Don't wait until you have a claim to review your policy and to know your rights.

Texas Homeowners Policies
You can buy a dwelling policy that covers only the structure of your house. Or, like most Texans who own their homes, you can buy a homeowners policy, which combines five different types of coverage:

Dwelling - pays for damage to your house and any outbuildings, such as detached garages and storage sheds.
Personal property - pays when household items, including furniture, clothing and appliances, are damaged, stolen, or destroyed.
Liability - protects you against financial loss if you are found legally responsible for someone else's injury or property damage. A homeowner's policy automatically provides $25,000 in coverage. You can buy up to $1 million in coverage for an extra premium.
Medical payments - pays medical bills for people hurt while on your property. It also pays for some injuries that happen away from your home, such as your dog biting someone. A basic homeowners policy pays $500 in medical bills. You can pay extra and get up to $5,000 in medical payments coverage.
Loss of use - pays living expenses if your home is too damaged to live in during repairs. The most common policy pays up to 20 percent of the amount for which your house is insured.

Types of Homeowners Insurance Coverages
Companies can sell several types of policies in Texas, each with a different level of coverage.

HO-A policies provide extremely limited actual cash value coverage of your home and its contents. Only the types of damage specifically listed in the policy are covered.
HO-A amended or HOA+ policies provide more extensive coverage than the base HO-A policy but less coverage than an HO-B.
HO-B policies provide replacement cost coverage for most types of damage, except those specifically excluded in the policy.
HO-C policies provide the most extensive coverage, but are more expensive than other types of policies.
National policies are policies of national insurance organizations or large national companies that the Commissioner of Insurance has approved for sale in Texas. Coverage provided by these policies may differ considerably from one another and from the coverage provided in standard Texas homeowners' policies.

Generally, HO-B policies provide the most coverage for the price, but some companies may not offer the HO-B policy.
Most Policies Cover Losses Caused by:

Fire and lightning
Damage by aircraft & vehicles
Vandalism and malicious mischief
Theft
Explosion
Riot and civil commotion
Smoke damage
Windstorm, hurricane, and hail

Most Policies Do Not Cover Losses Caused by:

Flooding
Earthquakes
Termite damage
Damage by insects, rats, or mice
Freezing pipes while your house is unoccupied (unless you turned off the water or heated the building)
Wind or hail damage to trees and shrubs
Losses if your house is vacant for 60 days or more
Wear and tear or maintenance

Companies may exclude coverage for certain losses. For example, if you live on the Gulf Coast, you might receive an endorsement that excludes coverage for wind and hail damage. In some areas with a history of hail storms, some companies provide only actual cash value coverage for roofs instead of full replacement cost. Actual cash value pays for damage minus depreciation on the roof, depending on its age and condition.

Most policies will not cover mold remediation beyond that necessary to repair or replace property damaged by a water loss otherwise covered by the policy. The HO-A policy offers no coverage for mold remediation or for damage caused by sudden and accidental water leaks, although some companies may offer that coverage as an endorsement to the base HO-A policy. If you have an HO-B policy, you will be able to buy additional coverage in increments of 25 percent, 50 percent, and 100 percent of your policy's limits to cover mold remediation. If you have questions or concerns about how a mold claim is being handled, or you need information about how to minimize mold losses, ask your insurance company for a set of guidelines regarding mold claims.

Maintain Adequate Coverage
Buy enough coverage to avoid a major financial loss if you have a fire or other loss. This means keeping a realistic dollar amount of coverage on your house.

Replacement Cost Coverage of Your House
Texas standard HO-B and HO-C policies provide replacement cost coverage for your house, up to your policy's dollar limits. 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. It does not include the value of your land.

To receive full payment (minus your deductible) for a partial loss, such as a hail-damaged roof, you must 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 pay only part of the expense of a partial loss.

Unless you buy an endorsement increasing your coverage, HO-A policies only provide actual cash value coverage. Actual cash value is the replacement cost of your property minus depreciation.

Replacement Cost Coverage for Your Personal Property
Homeowners' policies automatically cover household contents - furniture, clothes, appliances, etc. - up to 40 percent of the amount your house is insured for. This means if you insure your house for $100,000, its contents are insured for up to $40,000. You can get more coverage by paying a higher premium. This automatic coverage pays only the actual cash value of damaged, stolen, or destroyed household goods. Actual cash value is an item's replacement cost, minus depreciation.

You may be able to pay extra and buy replacement cost coverage that ignores depreciation and pays for a new item like the one you lost.

Replacement cost coverage gives you more protection than actual cash value coverage. The following example illustrates why:
A burglar steals your six-year-old television set. With actual cash value coverage, you get only what you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company pays to replace your TV with a new set similar to the stolen one. Companies generally want proof you replaced an item before paying your claim in full. However, if you have an HO-B policy, the company must advance you the first $1,500, plus the depreciated value of any other damaged property, without requiring proof of replacement. After that, the company must pay you within five business days after receiving proof you replaced, restored, or repaired the property. A company can offer to replace the items instead of paying cash, but the choice is yours.