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Different Types of Texas Homeowners Insurance

January 18, 2015

Whether you own a home or are planning on purchasing one in the near future, it’s essential that you have Texas homeowners insurance. For those in the market, you simply won’t get a home loan without first securing insurance. No bank wants to risk losing their collateral by giving out a mortgage on a house that isn’t insured. However, getting Texas homeowners insurance isn’t as easy as just checking a box on some application, not if you want the kind that’s going to give you the right amount of coverage. Read on for more information or simply visit for a free quote.


The first type of Texas homeowners insurance we’re going to cover is known as HO-1. These are the most bare-bones policies available. They come with hazard insurance that covers a list of possible “named perils.”  This kind of policy will also cover liability insurance. You definitely want this type of coverage because it pays out if someone gets injured on your property (e.g. if someone trips on a loose step and breaks their wrist).


Your next step up is called HO-2 insurance. This type of homeowners insurance gives you more coverage and includes not only your entire property (with some exceptions), but also any personal property that could be damaged like clothes, furniture, electronics, books, etc. Of course, you also get liability insurance with this option.

HO-2 also covers a much broader list of “named perils.” For example, if damage done to your home is so extensive that you can’t keep living there for an extended period of time, you would be reimbursed for needing to move into a hotel, go out to eat, etc.

Typically, this type of policy will also cover a homeowner’s personal property up to a certain percentage. Depending on the insurer, this will generally be between 50% and 70%.


HO-3 is the form of Texas homeowners insurance that is most common today. It’s the same as HO-2, except this type of coverage also protects your home from any damage that could occur from sources not explicitly excluded. This would include things like earthquakes, floods, water seepage and other similar exemptions. Personal property is only reimbursable for damage that is mentioned in the 16 perils the policy names.

Cash Value

With a simple cash value policy, a homeowner is paid the original price for anything that was damaged, minus any depreciation that would have occurred from wear and tear. So if you buy your home for $100,000, the most you could ever claim for it would be $100,000, even if it has appreciated over the years. Furthermore, the carrier can reimburse you for less if depreciation would have brought the price down further.

Replacement Value

On the other hand, you could opt for replacement value insurance which will cover however much the policy is for, regardless of what the property is worth. So if your policy is for $150,000 and damage happens to your property, regardless of what it is worth, that is how much an insurer will spend.

Take your time figuring out which form of Texas homeowners insurance is the right fit for your needs. Otherwise, an already bad situation could become a lot worse.