Windstorms are a frequent threat in Texas. Unfortunately, standard homeowners insurance doesn't cover windstorm damage in some parts of Texas, particularly coastal areas.
Many insurance providers in Texas offer separate windstorm insurance policies. If they deny you coverage, you can apply for coverage from the Texas Windstorm Insurance Association.
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How does windstorm insurance work?
Windstorm insurance covers your home's structure and your belongings within it from damage due to high winds, tornadoes, hail and other wind-related events. Windstorm insurance may cover loss of use, also known as "additional living expenses," too, if you have to relocate while the damage is repaired.
Most homeowners insurance policies cover wind damage. In parts of Texas, where wind damage to homes is a frequent danger in high-risk areas, windstorm insurance may be sold as a separate policy or rider.
Where to buy windstorm insurance
Windstorm insurance is available from many insurance providers in Texas. If an insurer denies you coverage, the Texas Windstorm Insurance Association (TWIA) offers a "last resort" coverage option in some counties.
You can buy a TWIA policy through private insurance companies in the state. Policies are not sold directly by TWIA.
How does Texas Windstorm Insurance Association coverage work?
While windstorm insurance coverage from a private insurer may vary from county to county, TWIA policy offerings are consistent across its coverage area. They include:
- Dwelling: Covers the structure of a home. It also covers external structures, like a detached garage, at 10% of the dwelling limit. The maximum dwelling limit is $1,773,000.
- Contents: Reimburses you for furniture, appliances and other covered belongings damaged by wind. The maximum limit is $374,000.
- ALE: If your home is unlivable due to windstorm damage, this coverage takes care of additional living expenses, such as a hotel room.
- Debris removal: Pays for removal of debris after windstorm-related cleanup on your property.
- Increased cost of construction (ICC): Covers additional costs stemming from compliance with current local and state building codes.
You can buy TWIA insurance at either actual cash value (ACV) or replacement cost for both dwelling and contents coverage. ACV coverage factors current depreciation into your claim payout. Replacement cost pays out at the full value of your dwelling and belongings.
Replacement cost is a better value in the long run, even though it usually costs more than ACV coverage. With ACV coverage, you will probably receive a much lower payout to put toward repairs after a windstorm.
If your dwelling coverage limit is at least 80% of your home's rebuild cost, your TWIA dwelling coverage is automatically at replacement cost.
What are the criteria to buy a TWIA policy?
To purchase a TWIA policy, you and your property must meet the following criteria:
- Your home is located in one of the following Texas counties:
- Harris (east of Highway 146)
- San Patricio
- At least one company that provides windstorm insurance in these areas has denied you coverage.
- Your home meets building codes as certified by the Texas Department of Insurance.
- You must provide proof of flood insurance coverage if your home is located in flood zones V, VE or V1-30; was built or altered on or after Sept. 1, 2009; and you're eligible to obtain flood insurance through the National Flood Insurance Program (NFIP).
- Your home meets all other TWIA underwriting requirements, which include maintaining the structure in good condition.
How much does a Texas Windstorm Insurance Association policy cost?
The average annual premium of a TWIA policy is around $1,750. Your premium may vary based on the amount of insurance you choose, your deductible amount and the type of construction. You can choose a deductible from $500 to 5% of the policy's coverage level.
Alternative windstorm insurance options
Some insurers in Texas just provide windstorm insurance. They usually have stricter criteria for underwriting than TWIA, but their rates may be lower. If you don't qualify for any of the above windstorm insurance options, look into the Texas FAIR Plan Association.
The FAIR Plan is a state-sponsored residential home insurance program. You may have to get both a FAIR Plan and a TWIA policy if you live in a TWIA coverage area and qualify for the FAIR Plan. The Texas FAIR Plan Association usually offers basic coverage, unlike the private market, which provides comprehensive policies. Due to the restricted nature of FAIR plan coverage, it does not cover some issues that a standard homeowners policy does, including:
- Damage due to falling trees and objects
- Damage from the weight of ice, sleet and snow
- Sewer or drain backups
- Mold, fungi and other remediation
Do I need windstorm insurance?
If you own a home in Texas but don't have a mortgage, the lender requirement for windstorm insurance is a non-issue. Even so, if you own your home, you probably want to protect your investment. According to the Insurance Information Institute, about one in 35 insured homes files a claim related to wind or hail damage each year.
Keep in mind that these statistics represent the average. If you live on the Texas coast or in Tornado Alley that runs from Central to Northern Texas, you have a higher chance of filing a claim.
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