Chapter 19 Principles of Real Property Insurance
Risks of Property Ownership Loss of property due to fire, wind, water, vandalism or other hazards Loss of use Liability loss resulting from negligence in the use of the property Financial loss, particularly the inability to make mortgage payments, as a result of disability or death of a wage earner
Property Insurance Direct Losses Replace damaged property Indirect Losses Living or businesses expenses Liability Insurance Against injury lawsuits
Texas Homeowners Insurance Can buy policy for house only OR coverage that includes: Dwelling & additional buildings Personal property Liability ($25k - $1M) Medical Payments for others $500 - $5,000 Loss of use – 20% of house insured value
Types of Texas Homeowners Insurance Coverage HO-A Limited coverage for home & contents HO-B Replacement coverage for most types of damage except listed HO-C Most coverage Most expensive
Most Texas policies cover losses by: Fire Lightning Vehicles Aircraft Vandalism Theft Explosion Smoke Wind Hail Water damage (sudden/accidental)
Most Texas policies DO NOT cover losses by: Flooding Earthquakes Termites Animals Wind/hail damage to landscaping Normal wear/tear
Other Texas Residential Policies Renters Personal property Living expenses Condo Same as renters Plus coverage for owner improvements Townhouses Individual policy OR Part of association master Mobile Homes If no wheels or on foundation, regular policy If wheels, Mobile Owners policy
Cash Value vs. Replacement Cash value Payment of current market price Replacement value Pay for new (similar) item
Other Types of Insurance Flood insurance Offered by National Flood Insurance Program Lenders may require it Hurricane & Windstorm Insurance Texas Windstorm Insurance Association If insurer won’t provide coverage Earthquake insurance Cheap in TX b/c of low probability
Factors that Affect the Premium Age of home Condition of home Replacement cost Construction materials Home location Quality of local fire dept. Your claim history