What does homeowners insurance actually cover — and what doesn't it?

A standard Texas homeowners policy covers your dwelling, other structures, personal belongings, your personal liability, and additional living expenses if your home becomes unlivable after a covered loss. It generally does not cover flood, normal wear and tear, lack of maintenance, or earth movement. Flood needs a separate policy.

How much dwelling coverage do I need in Texas?

Enough to rebuild your home at today's construction costs — not your purchase price or mortgage balance. Market value includes land and the local housing market, while rebuild cost doesn't, so the two often differ. An extended replacement cost add-on can provide a cushion if building costs spike after a disaster.

Why is my wind and hail deductible a percentage instead of a flat amount?

In Texas, wind/hail deductibles are commonly set as a percentage of your dwelling coverage rather than a flat dollar amount, because hail is the state's biggest property risk. For example, a 2% wind/hail deductible on a $400,000 home is $8,000 — so it's important to know yours before storm season.

Do I need flood or windstorm coverage in the Dallas–Fort Worth area?

Flood is never included in a homeowners policy and is worth considering even outside mapped high-risk zones, since heavy rain can flood almost anywhere. Separate windstorm (TWIA) policies apply to coastal Texas, not DFW — inland, wind and hail are part of your homeowners policy, with that percentage deductible.

Plain-English Glossary · Texas Homeowners

Texas Home Insurance Terms, Explained

Last updated: June 2026

A standard Texas homeowners policy covers five main things: your house (dwelling), other structures like a fence or shed, your personal belongings, your liability if someone's hurt or their property is damaged, and the cost of somewhere to live if your home is unlivable after a covered loss. What it generally does not cover is flood, and a few perils like normal wear and tear or earth movement. The terms that trip most homeowners up are the ones that decide how much you get paid — replacement cost vs actual cash value, insuring to rebuild cost instead of market value, and Texas's percentage-based wind/hail deductible. Here's each one in plain English.

What your policy covers

Dwelling (Coverage A)

Pays to repair or rebuild the physical structure of your home after a covered loss. This is the most important number on your policy and should reflect rebuild cost, not your purchase price or mortgage.

Other Structures (Coverage B)

Covers structures not attached to the house — detached garage, fence, shed, or a barn. Usually set as a percentage of your dwelling amount, which matters more on acreage and estate properties.

Personal Property (Coverage C)

Covers your belongings — furniture, clothes, electronics. Can be insured at replacement cost or actual cash value, and high-value items like jewelry may need a separate endorsement.

Loss of Use / Additional Living Expenses (Coverage D)

Pays your extra costs to live elsewhere — hotel, rent, meals — while your home is being repaired after a covered loss.

Personal Liability (Coverage E)

Covers you if someone is injured on your property or you're responsible for damaging someone else's property, including legal defense up to your limit.

Medical Payments (Coverage F)

Pays smaller medical bills if a guest is hurt at your home, regardless of who was at fault, without a liability claim.

How much coverage you need

Replacement (Rebuild) Cost

What it would cost to rebuild your home today with similar materials and labor. This — not market value — is what your dwelling coverage should be based on.

Dwelling Coverage vs Market Value

A common and costly mix-up. Market value includes your land and the local housing market; rebuild cost doesn't. In falling markets especially, your home can be worth less to sell but cost the same (or more) to rebuild.

Extended / Guaranteed Replacement Cost

An add-on that pays a cushion above your dwelling limit (for example, an extra 25–50%) if rebuild costs spike after a widespread disaster — useful when construction prices are rising.

How a claim gets paid

Replacement Cost Value (RCV)

Pays what it costs to replace damaged property with new, comparable items, minus your deductible — no deduction for age. More on RCV vs ACV for roofs.

Actual Cash Value (ACV)

Pays the depreciated value — replacement cost minus wear for age and condition. On an older roof, that can be a fraction of what a new one costs.

Deductible

What you pay out of pocket before coverage applies. A higher deductible lowers your premium; keep it to an amount you could comfortably cover.

Wind/Hail (Windstorm or Hail) Deductible

In Texas this is usually a percentage of your dwelling coverage, not a flat dollar amount — and it's separate from your all-other-perils deductible. A 2% wind/hail deductible on a $400,000 home is $8,000, so know yours before storm season.

Roof Payment Schedule

A sliding scale that pays a shrinking percentage of your roof's replacement cost as it ages. Common in Texas hail country; see how it works.

Policy types

HO-3

The standard homeowners policy for an owner-occupied house.

HO-4 (Renters)

Covers a renter's belongings and liability — your landlord's policy covers the building, not your stuff.

HO-6 (Condo)

For condo and many townhome owners; covers your interior, belongings, and liability, picking up where the HOA's master policy stops.

DP-3 (Dwelling Fire / Landlord)

For a home you own but don't live in, such as a rental property.

What's usually NOT covered

Flood

Flood damage is excluded from a standard homeowners policy and needs a separate flood policy (through the NFIP or a private insurer). Worth considering in parts of DFW even outside mapped high-risk zones, since flooding can happen anywhere it rains hard.

Windstorm — coastal note

In coastal Texas, windstorm coverage may require a separate TWIA policy. In DFW you're inland, so wind/hail is part of your homeowners policy — the thing to watch here is your percentage wind/hail deductible, not a separate windstorm policy.

Wear, neglect, and earth movement

Normal wear and tear, lack of maintenance, and earth movement (like foundation settling) are generally excluded. Insurance covers sudden, accidental events — not gradual deterioration.

Endorsement (Rider)

An add-on that changes your policy — to add coverage (like water backup or scheduled jewelry) or, sometimes, to reduce it (like an ACV roof endorsement). Always read new endorsements at renewal.

Extra liability

Umbrella

Extra liability protection that sits above your home and auto limits, kicking in when those run out. A common, affordable add-on for homeowners with assets to protect.