Homeowners Insurance in Texas: Coverage Buyers Need to Understand

Q: Are solar panels covered by homeowners insurance?

Coverage varies by insurance company and policy. Homeowners should notify their insurer about a solar system and confirm whether it is covered as part of the dwelling or requires additional coverage.

Q: Does homeowners insurance cover a plumbing leak under a slab foundation?

Coverage depends on the policy and cause of loss. Certain sudden and accidental plumbing losses may be covered, while gradual leaks may not be. Coverage involving the slab or foundation may require an endorsement.

by Keith & Sheila Campbell

Understanding Homeowners Insurance in Texas: What Home Buyers and Owners Need to Know

Homeowners insurance is one of the most important—and sometimes most misunderstood—expenses associated with owning a home. For Texas homeowners, the details of a policy can be especially important because of hail, windstorms, extreme temperatures, expansive soils, plumbing failures and other conditions that can result in expensive repairs.

Two insurance policies with similar annual premiums may provide dramatically different coverage when a homeowner actually has a claim. That is why buyers should look beyond the monthly premium and understand what the policy actually covers.

Important: When comparing homeowners insurance, don't compare price alone. Compare the coverage limits, deductibles, exclusions, roof settlement provisions and endorsements or riders included with each policy.

Replacement Cost vs. Actual Cash Value

One of the most important things to understand is whether your home, personal property and especially your roof are insured using Replacement Cost Value (RCV) or Actual Cash Value (ACV).

Replacement Cost Coverage

Replacement cost coverage generally pays the cost to repair or replace covered damaged property using today's construction or replacement costs, subject to your policy limits, deductible and other policy provisions.

Depreciation may initially be withheld during the claim process and then paid after repairs are completed, depending on the policy.

Actual Cash Value Coverage

Actual cash value generally means the insurer determines the replacement cost and then subtracts depreciation based on factors such as the item's age and condition.

This distinction can become extremely important with an older roof.

Coverage	How It Generally Works	Potential Homeowner Impact
Replacement Cost	Pays based on current repair or replacement cost for a covered loss, subject to the policy.	Generally provides greater protection against large replacement expenses.
Actual Cash Value	Replacement cost minus depreciation.	The homeowner may have substantially more out-of-pocket expense.

Buyer Tip: Never assume that because the dwelling has replacement-cost coverage the roof automatically has the same coverage. Some policies can contain separate roof provisions or endorsements that settle roof claims using actual cash value or an age-based payment schedule.

Your Roof Can Have a Major Impact on Homeowners Insurance

In Texas, the roof is one of the first things an insurance company may evaluate when deciding whether to insure a property and how much to charge.

Important factors may include:

Age of the roof
Roofing material
Overall roof condition
Previous roof claims
Wind and hail exposure
Whether the roof qualifies for replacement-cost coverage
Whether special wind/hail deductibles apply

As a roof gets older, an insurance company may charge more, change the roof from replacement-cost coverage to actual-cash-value coverage, use an age-based payment schedule, or potentially decline roof coverage depending on the roof's condition and the insurer's underwriting requirements.

Composition Shingles vs. Metal Roofs

Composition Shingle Roofs

Asphalt composition shingles are common throughout the San Antonio area, but Texas hail and wind can be hard on them. Roof age can therefore become an important insurance consideration.

Home buyers should determine the approximate age of the roof and provide accurate information to their insurance agent when requesting a quote.

Metal Roofs

Metal roofing can offer excellent durability and resistance to certain hazards, and some insurance companies may offer favorable pricing or discounts for qualifying roofing materials.

However, homeowners should ask about cosmetic damage exclusions. A metal roof may remain completely functional after a hailstorm while still having visible dents. Some policies may exclude damage that is considered cosmetic rather than functional.

Ask your insurance agent: “If hail dents my metal roof but does not cause it to leak, is the cosmetic damage covered?”

Don't Forget the Wind and Hail Deductible

Texas homeowners should pay particular attention to wind and hail deductibles.

A policy might have one deductible for certain losses and a separate percentage deductible for wind or hail. A percentage deductible can represent a significant amount of money.

For example, if a home is insured for $400,000 and the applicable deductible is 2%, the homeowner's deductible would be:

$400,000 × 2% = $8,000

That is very different from assuming you have a traditional $1,000 or $2,000 deductible. Always ask the insurance agent to convert percentage deductibles into actual dollar amounts.

Solar Panels Can Change the Insurance Conversation

Solar panels are increasingly common on Texas homes, but buyers should never assume the existing homeowner's insurance arrangement will automatically transfer or that every insurance company treats solar systems the same way.

Before buying a home with solar panels, determine:

Whether the panels are owned, financed or leased
Who owns the solar equipment
The approximate replacement value of the system
Whether the panels are roof-mounted or ground-mounted
Whether the insurance company considers them part of the dwelling
Whether additional coverage or an endorsement is necessary
Whether adding the system changes the home's insured replacement cost
Whether the roof and solar panels have separate deductibles or exclusions

Why Solar Panels May Affect the Premium

A permanently installed solar system can increase the amount of equipment attached to the home and potentially increase the cost of rebuilding or repairing the property after a covered loss. Insurers may therefore need to account for the solar equipment when determining the home's replacement cost and premium.

Insurance treatment varies significantly between companies, so homeowners should notify their insurer when installing solar and buyers should obtain insurance quotes before closing on a home equipped with solar panels.

Important for Buyers: Homeowners insurance is only one part of evaluating solar. Buyers should also understand whether there is an outstanding solar loan, lease, power purchase agreement or other obligation associated with the system.

Water Damage and Your Foundation

This is an especially important subject for homes in Central and South Texas.

Many homes throughout the Greater San Antonio area are built on concrete slab foundations over expansive soils. Plumbing and drain lines may run through or beneath the slab.

A plumbing leak underneath the foundation can create two different expenses:

Repairing the failed plumbing line.
Accessing and repairing the slab, foundation or other parts of the structure damaged while reaching the plumbing system.

These expenses can become significant very quickly.

Foundation or Slab Water-Damage Endorsements

Standard homeowners policies do not necessarily provide the same protection for damage involving a slab or foundation. Texas homeowners may be able to purchase additional coverage through an endorsement or rider.

An endorsement modifies the standard insurance policy by adding, removing or changing coverage.

Ask specifically: “Does my policy include coverage for damage to the slab or foundation caused by an accidental plumbing leak, and does it cover the cost of accessing the plumbing beneath the slab?”

The exact wording matters. Coverage for water damage inside the home does not necessarily mean every cost associated with an underground or under-slab plumbing problem is covered.

Sudden Water Damage vs. Long-Term Leaks

Another important distinction is sudden and accidental water damage versus damage caused by a gradual or long-term leak.

Many homeowners policies provide coverage for certain sudden and accidental plumbing losses, while damage caused by ongoing leaks, maintenance problems or deterioration may be excluded.

This is one reason homeowners should address plumbing leaks and signs of moisture as soon as possible.

Water Backup Coverage Is Different

Sewer or drain backup coverage is another area homeowners should discuss with their insurance agent.

A standard policy may not automatically provide the level of protection a homeowner expects if water or sewage backs up through a drain or sewer line. A water-backup endorsement may be available for an additional premium.

This is different from flood insurance.

Homeowners Insurance Does Not Normally Cover Flooding

One of the biggest insurance misunderstandings involves the word “water.”

A homeowners policy may cover certain plumbing-related water losses, but rising surface water and flooding are generally not covered by standard homeowners insurance.

Flood protection normally requires a separate flood insurance policy.

Other Riders and Endorsements Worth Asking About

Depending on the home and your personal situation, ask your insurance professional about coverage for:

Foundation or slab damage
Water or sewer backup
Extended or guaranteed replacement cost
Building-code or ordinance coverage
Replacement-cost coverage for personal property
Roof replacement-cost coverage
Matching roof or siding coverage, if available
Mold remediation
Jewelry, firearms, art or collectibles
Home-based businesses
Swimming pools and other liability exposures
Detached workshops, garages and storage buildings
Solar panels and related equipment

Home Buyers: Get Your Insurance Quote Early

We recommend that buyers begin investigating homeowners insurance during the purchase process rather than waiting until just before closing.

A home's insurability and insurance cost can affect the buyer's total monthly housing expense and, in some situations, even loan qualification.

Before the end of your inspection and due-diligence period, consider asking your insurance agent about:

Annual premium
Dwelling replacement-cost limit
Roof coverage
Roof age
Wind and hail deductible
Other deductibles
Foundation/slab endorsements
Water-backup coverage
Solar-panel coverage
Flood insurance needs
Previous claims associated with the property

Don't Shop for Homeowners Insurance on Price Alone

Saving several hundred dollars per year on insurance can look attractive. But a less expensive policy that has significantly higher deductibles, actual-cash-value roof coverage or important exclusions could cost a homeowner thousands—or tens of thousands—of dollars after a major loss.

A better question isn't simply: “Which insurance company is cheapest?”

Ask: “Which policy gives me the coverage I need at a competitive price?”

Questions to Ask Your Insurance Agent

Is my dwelling insured for replacement cost?
Is my roof replacement cost or actual cash value?
Does roof coverage change as the roof gets older?
What is my wind and hail deductible in actual dollars?
Are there cosmetic-damage exclusions for my roof?
How are solar panels covered?
Does the solar system increase my dwelling replacement-cost requirement?
Do I have foundation or slab water-damage coverage?
Does the policy cover access required to repair an under-slab plumbing leak?
Do I have sewer or drain backup coverage?
Do I have ordinance or law coverage for code upgrades?
Is my personal property covered at replacement cost?
What major exclusions should I know about?

Frequently Asked Questions

What is the difference between replacement cost and actual cash value?

Replacement cost coverage generally pays based on the current cost to repair or replace covered property, subject to the policy. Actual cash value subtracts depreciation based on factors such as age and condition.

Can the age of my roof affect homeowners insurance in Texas?

Yes. Roof age and condition can affect underwriting, premiums and the type of roof coverage available. Some insurers may change older roofs from replacement-cost coverage to actual-cash-value coverage or use an age-based settlement schedule.

Can a metal roof lower my homeowners insurance?

Possibly. Some insurers offer discounts for roofing materials that resist wind, hail or fire damage. However, homeowners should also ask whether the policy excludes cosmetic hail damage to metal roofing.

Are solar panels covered by homeowners insurance?

Roof-mounted solar panels may be covered as part of the dwelling by some insurers, but coverage varies. Homeowners should notify their insurance company about the system and confirm coverage limits, exclusions and whether additional coverage is required.

Does homeowners insurance cover a plumbing leak under a slab foundation?

It depends on the policy and the cause of the loss. Certain sudden and accidental plumbing losses may be covered, while damage caused by gradual leaks or maintenance issues may not be. Coverage for damage to the slab or foundation may also require an endorsement.

Does homeowners insurance cover flooding?

Standard homeowners insurance generally does not cover rising floodwater. A separate flood insurance policy is normally required for flood protection.

Buying or Selling a Home in the Greater San Antonio Area?

The condition of the roof, foundation, plumbing, solar equipment and other major systems can affect much more than the inspection. They may also affect insurance costs and the long-term cost of owning the home.

Keith & Sheila Realty Group helps buyers look beyond the listing photos and understand the important questions to ask before purchasing a home.

Contact Keith & Sheila Home Buying Process Inspector Questions

Disclaimer: Keith & Sheila Realty Group and its agents are not insurance providers. This information is provided for general educational purposes and is not insurance, legal or financial advice. Insurance policies, underwriting requirements, deductibles, exclusions and endorsements vary by insurance company and policy. Always review your actual policy and consult a licensed insurance professional regarding your specific coverage.