UPDATED: Mar 18, 2020
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Texas home insurance rates are high; for 2018 the Lone Star state had an average rate that was 58% above the national average. While that does not make Texas the most expensive state, it is in the top ten. Getting a good rate without sacrificing coverage is a challenge, and means shopping around as much as possible. These top picks for homeowner’s insurance in Texas are a great place to start.
The Basics of Texas Home Insurance
Texas home insurance is not required by any law, unlike auto insurance, but it is required as part of a mortgage contract. In order to protect their investment in your home, lenders will mandate a minimum amount of dwelling coverage on the home, calculated based on the replacement cost of the home.
Replacement cost, not to be confused with market value, is a calculation of how much it would cost to rebuild the home from the ground up. Many insurance companies offer extended replacement cost coverage that adds an additional amount on top of the calculated cost in order to account for increases in the cost of building materials.
In addition to dwelling insurance – which is the biggest part of any home insurance policy – a Texas home insurance policy also includes personal property coverage and liability protection as two other standard pieces of the package. In addition to these three major parts of a home policy, a variety of other coverage may be included either standard or as an endorsement that can be added on to provide custom protection.
Most policies include loss of use coverage – a benefit that pays for living expenses while your home is being repaired on a covered claim – as standard as well. Common endorsements include water and sewer backup, riders for high-value items, replacement cost coverage for personal property, and equipment breakdown coverage.
Specifics of Home Insurance in Texas
Texas is a big state, and the risks differ depending on where you live. Like all states bordering the Gulf of Mexico, Texas has a high risk of hurricanes. In other parts of the state, tornadoes and wildfires present a bigger risk. All of these natural disasters that occur regularly across the state add up to higher rates.
They also mean that Texas homeowners may need to look at specific coverage in order to properly protect their homes. Flood insurance is an extra policy that some homeowners in high-risk areas will likely be required to carry as a part of their loan. Even when it is not required, flood insurance is a good idea since flood damage is excluded by standard home insurance policies.
Texas homeowners may be able to receive a discount that is only offered in hurricane-prone parts of the country – wind mitigation. This is a discount given to homes that have upgrades designed to reduce wind damage.
In Texas, there is a plan available to help anyone who is having trouble getting home insurance. This may happen for a variety of reasons but often relates to the age or condition of the home. The Texas FAIR plan is in place to ensure all homeowners have access to coverage.
In a state where rates are high, shopping for an affordable option can be a challenge. The least expensive insurance is rarely the best insurance; our goal was to present home insurance companies that provide not only a competitive rate, but do so without compromising coverage.
We looked for insurance companies that offer a comprehensive package policy that includes plenty of benefits as standard. This means you can avoid being nickel-and-dimed on adding the options you need and make sure your home is properly covered. Specifically, we chose home insurance policies that provide extended replacement cost coverage, replacement cost for personal property, and as many other benefits as possible as part of the base package or as part of a single package endorsement.
We also looked for insurance companies with a great reputation. No matter what amount you pay for your home insurance, it does not help you if the company writing the policy does not take care of you when there is a claim. We looked for a good reputation overall for customer service, as well as looking specifically at claims handling – the backbone of a good insurance company.
All of the companies we have chosen, provide coverage across Texas. While the right company for any given home might differ depending on needs – a ranch needs different coverage from a suburban home or a condo in Houston – all of the companies we selected are available to most homeowners. We left off those companies that have specific eligibility requirements or cater to a specific portion of the population. That means that while USAA ranks well, they are not in our top picks due to the fact that they insure only military members and their families.
Our Top Picks
These three companies offer Texas homeowner’s great coverage at competitive rates, and they do it with excellent customer service.
Based out of hurricane-prone Florida, UPC offers policies specifically designed for Texas homes. Although their base policy does not have extended replacement cost, they offer bundled package endorsements that allow the insured to add a lot of extra coverage for one extra premium. And when it comes to premiums, they stack up well. UPC is among the lower-priced insurance companies for the state of Texas.
While they are not big enough to rank in major national consumer studies, the Texas Department of Insurance’s complaint database shows the company to be on the low side, even compared to big-name insurers.
One of the biggest insurance companies in the nation, Farmers is not known for low rates, but in Texas, they stack up well. They also rank well in customer satisfaction, landing in J.D. Power’s top ten for 2018.
Farmers offers very comprehensive home insurance policies with plenty of extras built in. They offer three levels of coverage with each adding bundled enhancements, so you do not have to pay an extra premium for each add-on. And you can bring rates down with their wide range of discounts, including bundling a variety of different policies – multi-policy discounts are available for auto, life, boat, and more.
Kemper does not include extended replacement cost as standard, but their rates are so competitive to begin with that adding the endorsement still makes them a good value. They also offer a packaged auto and home policy that covers everything on one bill and with a blanket limit – and this package includes replacement cost on contents at no added charge.
Like UPC, Kemper doesn’t rank on J.D. Power’s studies, but they have a very low complaint ratio with the Texas Department of Insurance and low complaint volume overall. They also give shoppers the option of buying direct or using an agent, making shopping your way a bit easier.
Shopping for Home Insurance in Texas
Because Texas is a huge state that encompasses everything from ranches to urban dwelling to coastal communities, the right insurance differs depending on where you live. Shopping around with as many companies as possible is the best way to make sure you are getting the best deal for your needs.
If you live in a rural community, and especially if you have a farming or ranching operation of any size, you will need specific coverage. Make sure you know your needs before you start shopping, regardless of what they are. Going into the process with an idea of what dwelling coverage level you need as well as which options you want to add makes shopping easier.
Although we do have a big company in our top picks, Texas’ specific risks make some of the smaller, regional companies a good pick since they understand those risks better. A trusted agent is a good way to gather quotes from some of the companies you might otherwise pass by. The more options you have to consider, the better your chances of getting the best possible deal.
The Bottom Line
With the high risks of natural disaster in Texas, insurance that is prepared to handle that potential is a must. Ask questions about the coverage you need when shopping, and look at as many companies as possible before deciding. It is possible to get a good deal on your home insurance in Texas, it just takes a little time and effort.
For a list of companies that we recommend, visit our Best Insurance Companies page.