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How to Pick Home Insurance in Houston: Five Coverage Checks Before You Switch
Two policies can match on price and pay very differently at claim time. Run these checks on any policy you are considering, including the one you have now.
The answer
Compare the contract before the price. Check which causes of damage are covered, how the roof is paid, what water damage leaves you paying, what every deductible means in dollars, and what limits apply to valuables. Then confirm the rebuild number, the liability limit, and loss of use. The right policy is the one you are proud to have on your worst day.
A switch has a price of its own
Switching your home insurance for 300 dollars less a year, then paying a tree crew 1,800 dollars because the new company's inspection asked for it, is a losing game. The policy you are leaving has already passed underwriting. The one you are joining has not looked at your house yet.
Four contract differences change my recommendation more than anything else. Roof settlement. Reduced water limits. Replacement cost on the home and on your belongings. Raised deductibles. Each one is a red flag for a household that wants insurance to handle the sudden, accidental, and catastrophic losses that come with living around Houston. Many of us are fine paying for more coverage. We just want to know it is there to do its job.
Five coverage checks before you switch
- Causes of damage. Which causes of damage does the policy cover, and which does it leave out? Check the home and your belongings separately, because many policies cover them differently.
- Roof settlement. How would the policy pay for your roof today, and will it pay the same way as the roof gets older? Replacement cost pays based on current costs, and actual cash value pays less as age and condition lower the value. Go deeper with roof payment schedules and the actual cash value roof gap after Houston hail.
- Water damage. Most policies cover a sudden and accidental release of water, and most leave out a continuous leak. Ask whether the water limit applies per claim or per policy year, which coverages share it, and whether backup from a drain is covered. Flood is its own question. See who pays for water damage in Houston and Houston flood insurance.
- Deductibles and any other share you keep. Turn every percentage into dollars. On a home insured for 400,000 dollars, a 2 percent deductible is 8,000 dollars. Ask whether the wind and hail deductible differs from the deductible for other damage, and whether anything besides the deductible changes what you pay on a claim. Work the math with wind and hail deductible percentages.
- Valuable property. Do jewelry, firearms, art, or collections have their own lower limits? Ask what each limit is and whether listing items separately would change it. Start with guns and jewelry coverage.
Three more checks that are never optional
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The rebuild number
People pick their own number for the home. They use what the house is worth or what it would list for. Rebuilding has nothing to do with either. It is labor and materials, and both rise with inflation. We set the number with a replacement cost estimator, and so do the carriers. If four or five carriers tell you the home is underinsured, you probably are, and the fix is raising the limit before a claim tests the coinsurance condition.
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Liability
Five hundred thousand dollars should be the floor. It costs very little more than 300,000 dollars, and 300,000 dollars is old school. When the floor is not enough for what you have built, an umbrella policy sits on top of it.
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Loss of use
Nothing taught Houston this lesson like the February 2021 freeze. Pipes burst after the power failed, stores closed, supplies ran short, and hotel rooms cost far more than anyone planned. TDI's data call counted more than 500,000 claims and 5.8 billion dollars paid in the first months after the storm, most of them on homes, and some of those claims ran a long time. Households with more loss of use coverage could stay out longer while repairs waited on parts and crews. Sometimes a world problem lands on top of your own.
Total household cost
Price covers one year. Your real cost is the premium plus everything you agreed to pay yourself. Add the deductibles in dollars, every limit that could leave you short, and the flood or umbrella policy the home needs.
Then weigh that against your ability to carry a bad year. Some households can absorb 100,000 dollars of damage and keep the premium difference. Maybe they own the construction company. Good for them. For the rest of us, the money that was supposed to be the college fund should never pay for a policy decision nobody walked us through.
There is an emotional side too. Some of my most careful clients, the lawyers and the engineers, have the money and still choose more coverage. They know the data on Houston storms. That is a sound decision, and it is theirs to make.
Which market are you in
It depends on the year.
For the last few years we were in a hard market. Carriers tightened underwriting while claims and inflation stacked up. In a hard market, if you have a great company, staying is usually the best price you will find. I remember a household 35 years into a policy with a large national carrier. Replacement cost on a 25-year-old roof, replacement cost on their belongings, increased water coverage, the carrier's top tier. They were unhappy with the price and unhappier with their agent. The closest alternative was a newer, smaller carrier, and they kept the contract. They had bet on a stable carrier for the long run, and it paid them back with a better policy at a better price and no new underwriting.
Now the market is softening. The price of beef came down, and it does not matter whether you buy filet or chuck. Both cost less. The question is whether you spend a little more for a stable, well-run company or go as low as you can. Either answer can be right. A Houston household with a high-value home was paying near 13,000 dollars a year with a national carrier whose strength lies far from the Gulf. Coastal risk is not what that company does best, and the price showed it. We placed the home with a carrier that knows Gulf Coast risk, at about half, with the coverage intact. The decision was theirs.
In any market, I want a carrier that chose its customers well, priced its risk honestly, and paid its claims. A company writing every house on Galveston Bay will have a hard year when a hurricane comes, and so will its customers.
Before you sign
The policy you are leaving has already passed underwriting. The one you are joining has not met your house yet.
You deserve a brokerage that looks at what a switch will require before you sign, and tells you when the honest answer is to stay.
Charles McDade, LUTCF
Questions readers ask
Should I switch home insurance for 300 dollars a year?
Only after you know what the switch requires. A new company inspects the home, and the inspection can ask for roof, tree, or repair work that costs more than the savings. Run the five checks first.
Is 300,000 dollars of liability enough in Houston?
It was the standard for a long time. Today 500,000 dollars costs very little more and should be the floor. Households with more to protect add an umbrella policy on top.
How much loss of use coverage do I need?
Enough to stay out of the house for as long as repairs could take in a bad year. The 2021 freeze showed how long that can be when parts, crews, and hotel rooms run short.
Does a lower price mean worse coverage?
Sometimes a lower price is the better policy, especially when the market softens. The contract decides. Run the five checks on both policies.
Sources worth opening before you decide.
- Insurance and your roof, Texas Department of Insurance
- Home policies, replacement cost or actual cash value, Texas Department of Insurance
- Home insurance guide, Texas Department of Insurance
- February 2021 winter storm data call summary, July 2021, Texas Department of Insurance
- February 2021 winter storm data call summary, March 2022, Texas Department of Insurance
The purpose is to help the reader ask better questions before claim time.
Know what the switch requires
A switch is a decision. Make it on purpose.
Send us the policy you have and the one you are considering. We compare the two contracts line by line, coverage before price, and tell you what changes, what the inspection will ask for, and whether staying is the better answer.
The audit is free. The decision is yours. No broker fees for personal lines clients.
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