Over the next few weeks, I will be going over and explaining some the coverage available on the Texas Homeowners Insurance Policy. We will discuss the various policy types now available in Texas, the coverage within those policies and address commonly asked questions relating to the Texas Homeowners Insurance Policy. I will start today with a brief history of the Texas Homeowners Insurance Policy.
For many years, homeowners insurance policies were standardized in Texas. They had a HOA Policy form, a HOB Policy form and a HOC policy form and that was it. Please note that this was in Texas only. The other 49 states had what they called an ISO Form or a Company Specific Form. Us Texans had to be different, ya know?
The HOA policy was a very limited form of coverage. It was what is called a named peril policy, that only covered major losses. It was often referred to as a Fire Policy, because not much else was covered. No replacement cost, no water damage, just very basic coverage. This insurance policy was normally written on old homes in poor condition.
The HOB policy was the most common policy written in Texas. It was also know as the Broad Form. Great coverage, all risk on the dwelling(unless excluded), named peril on the contents, included replacement cost coverage, water damage, mold coverage, very broad coverage.
The HOC policy was even broader, in that it was all risk coverage on the dwelling and contents and had all the other coverage that was available on the HOB policy. This was typically written on high value homes. It didnt really add much practical coverage and, as a result, very few companies offered it and very few people had it.
So, at the time, most people had the HOB policy and could call around and get home insurance quote comparisons easily. Ah, the good old days…..
Then a few years ago a thing called “mold” came up and the Texas home insurance industry was turned upside down. Companies began to raise rates, limit coverage and even completely pull out of the State of Texas for homeowners insurance. The policy was never intended to cover mold related damage and even had an exclusion in the policy for mold, but a court ruling found that the policy should pay for mold related damage if it was a consequential loss resulting from another covered peril.(Water Damage).
After a short period of time, the Texas Department of Insurance agreed to allow companies to start offering other homeowners insurance policies in Texas that would limit and/or exclude mold damage.
As a result, we now have many different Homeowners Insurance policy types available. There is the HOA, HOA Plus, HOA Enhanced, HOB, HOB Modified, HO3, HO3 Modified, Company Specific Forms and many variations of these. Getting an apples for apples comparison is now quite difficult. Most agents only offer one or two of these policy types and of course they will insist that whatever they offer is the best and that everything else stinks. Also many agents now use these different policy types to confuse consumers and “muddy the water” to try to scare their clients into keeping there current insurance with them. Not a good situation. Fortunately, most agents do not use these unethical tactics.
The good news is that virtually all of these policies offer good coverage and there are only subtle differences in coverage that should be based on the insured’s preference. I will go into more detail on the major coverage differences in these policies in future posts. For now, your best bet is to deal with an agent that represents companies that offer all or most of these policies and can give you an objective overview of the coverage differences, so you can make an informed decision.
