One of the most important steps in buying an Austin home is securing homeowners insurance. If something happens to your home or the items in it, ideally the insurance will cover damage repair or replacement costs. While we all like to think nothing will ever happen to us or our beautiful homes, most mortgage lenders require homeowners insurance as a contingency to financing. In other words, if you don’t have homeowners insurance, they will not provide funding. They want their investment protected, too.
Before agreeing to and signing off on a homeowners insurance policy, make sure you read it and that it reflects what you think you’re getting. If you don’t understand it, ask questions and seek advice from a professional or someone knowledgeable whose judgment you trust. If you are buying an Austin home, now is the time to make sure the policy has the type and amount of coverage needed.
In Texas, there are two basic types of homeowners insurance. The first is for basic comprehensive coverage, sometimes called an all-risk policy. It covers all types of damage or loss unless they are specifically excluded from the policy. The other type, called a perils policy, only covers specifically named types of loss.
Most comprehensive insurance will cover your house and any fences and detached buildings, like a shed or garage. It also typically covers contents and personal property, like clothes and furniture. If someone is injured on your property, their medical bills may be covered after a deductible and up to a specified amount. Certain types of lawsuits against you involving damages and injuries to other people are also covered. If you must leave your Austin home for a time due to damage, most policies will cover additional living expenses while it is being repaired.
Oftentimes people are so excited about buying a home that they forget to pay attention to their homeowners insurance policy, or it is overshadowed by other things, such as financing or appliances. Some people never even read it unless or until something happens or there is a big storm coming. Before you sign, always read the policy to see what causes of damage are covered, such as hurricane, fire, theft or an unexpected accident. Most policies do not include flooding, termite infestation or earthquakes. These require separate policies, or riders. When you are setting up your Austin homeowners insurance policy, don’t forget to read the fine print. It probably says something important you will need to know later.