Rules About Homeowner’s Insurance in Texas

Posted on by agentinsure

No laws require Texas residents to invest in homeowner’s insurance. You may still need to seek out an indemnity plan as legislation allows for a bank or mortgage company to require assurance that protects their assets during repayment terms. With the ball being in their court, some financial institutions may take full advantage by asking for more coverage than necessary. Here, then are four elements of law concerning homeowner’s insurance that applies to Austin, TX, residents and others living in the Lone Star state. 

Banks cannot force you to cover the loan’s amount.

While it would be ideal to obtain insurance that pays off the mortgage in addition to funding damages, it is not necessary to have such excess. A mortgage company can only ask that you have indemnity that pays for property damage and personal possessions when tragedy strikes. 

Lenders may not factor in the home’s fair market value when determining the home’s replacement cost.

Some financial institutions use such tactic to raise the overall coverage requirement so that you end up paying through the nose for premiums. You as the consumer have the right to research quotes before agreeing to pay them, which may include getting a second opinion. Homes in Austin, TX, are relatively economical. You should, therefore, not find yourself paying tens of thousands in premiums for insurance coverage. 

"Special flood areas" may require additional coverage

Your lender has the legal right to require flood insurance if you reside in an area that has one percent higher chance of flooding. Individuals living near the Gulf Coast and in Zones V, VE, or V1-V30 are usually mandated to solicit to the National Flood Insurance Program (NFIP). Those residing in areas prone to hurricanes may also be required to enlist in NFIP before acquiring additional insurance from the Texas Windstorm Insurance Association (TWIA). 

Insurance is available for all

Austin, TX, residents who do not qualify for traditional indemnity can take heart in the Texas FAIR measure. Under the Fair Access to Insurance Requirements Plans, individuals living in high-risk areas can still qualify for primary insurance even if they were previously denied. Such measure is good news for those Texans living in older homes that may not come up to par with standard requirements.