Of all the issues that North Texas homeowners face, one of the most frustrating is foundation damage. It seems to come on slowly, where you don’t necessarily recognize it until you have a multi-thousand dollar repair bill on your hands. If you’re like most people, if you find out you have foundation damage your first thought will be to reach out to your Dallas insurance agent, Lewis Family Insurance Group, to find out if your Texas homeowners insurance covers this type of damage.
Like most things in insurance, the answer is: “it depends”. The reason is that insurance policies are written to cover certain, specific types of losses, referred to as “perils”. Certain policies cover certain perils, but this blog post will try to give a general understanding of what is and isn’t covered when it comes to foundation damage. As always, though, read your policy and reach out to your agent/carrier to attempt to verify coverage before filing a claim.
So, from a 30,000 foot view whether or not foundation damage is covered will depend on what caused the damage in the first place. Some of the common causes of foundation damage in Texas are:
1) Damage due to shifting soil or earth movement.
Texas, North Texas specifically, has soil with high clay contents. This means that the soil expands and contracts as it absorbs water causing your foundation to shift. This tends to be the most talked about cause of damage to foundation, but unfortunately most insurance policies do not cover damage due to shifting soil as it is indicative of the client failing to take preventative steps to prevent and/or mitigate the damage. In the instance of earth movement, homeowners policies typically do not cover, and actually exclude, covering damage as a result from earth movement, sinkholes, mud and landslides, etc.
2) Damage due to faulty construction
Most homeowners’ policies in Texas will not cover damage that is a result of faulty workmanship or building materials. In this instance, you would not be reimbursed for the cost of having the construction recompleted/repaired, therefore your best bet would be to contact the builder or contractor who initially completed the work to discuss remedies.
3) Damage due to flooding or leaks
Beginning with flooding, typically the only policy that will cover flooding (flooding=rising water entering the home from outside) is a flood policy. While there are private companies who write flood insurance, the most common flood policy is routed through FEMA and based on Federal Government standards. As far as damage due to water originating inside the home (from a pipe, for example) your policy will have specific language detailing what is and isn’t covered. Often the damage must result from a sudden and unexpected event, meaning knowing you have a leak and waiting 3 or 4 weeks to stop the damage would likely not be covered.
Bottom line: While everyone should have their home protected, Texas homeowners’ insurance doesn’t cover every single type of damage you might face as a homeowner. Your best course of action is to always prevent damage from getting worse, and contact your insurance agent to find out what steps to take moving forward to best protect your home.
If you’ve had insurance for more than a minute, you’re likely familiar with the term “deductible”. Deductibles apply to various types of insurance: home, renters, auto, health, etc. Even within some certain coverages added to policies there could be a separate deductible that applies before the coverage “kicks in”. In short: for homeowners insurance the deductible is the portion you agree to pay (other than the premiums themselves) before the insurance company begins to pay for repairs to your home or property.
This portion you agree to pay in the form of a deductible is often a small percentage of your home, most often 1 or 2%. So, for example, if you have a $300,000 home and a 1% deductible you would pay the first $3,000 in the event you filed a claim to have your roof replaced and the remainder would be paid by the insurance company.
Insurance, both from the standpoint of the client and the company, is all about risk management. The more risk the insurance company takes in covering you the higher your premiums will be. The more risk you are willing to assume as the insured the lower, generally speaking, your premiums will be. A 16-year-old driving a brand-new Corvette is likely to be a higher risk for the insurance company than a 45-year-old with a perfect driving record sporting that 8-year-old Ford Focus. The same is true for your homeowners insurance deductibles. If you agreed (whether you knew it or not) to cover a 2 or 3% deductible before the insurance company has to pay to cover that roof or plumbing repair, you’re likely to see a much lower premium.
After February 2021’s winter storm a lot of Texans were shocked to learn that while they were paying crazy low rates for their homeowners insurance, they were expected to fork over a massive amount of money before the insurance company would cover any repairs. This was compounded by the fact that home values and rebuild costs continue to skyrocket in North Texas (hello rising cost of lumber).
LFIG isn’t opposed to high deductibles in and of themselves. There are a number of reasons someone could decide to have a 2, 3 or even 5% deducible. It’s never our job to “tell” you what to do. What is vitally important though, and something that we saw after the winter storm, is that clients know exactly what their deductible is, not just in terms of some random percentage, oh you have a 2% deductible, but rather “YOU’RE EXPECTED TO PAY $10,000 BEFORE THE INSURANCE COPMANY COVERS ANYTHING”. If you’re aware of the deductible, are comfortable with it and willing to assume that risk there isn’t an issue. The problem comes when so many people are shocked to find out what that percentage deductible means in real world dollars.
Because we have access to dozens of carriers, we can shop to find you the best coverage for the most affordable premium. As far as homeowners insurance is concerned part of that process includes discussing what kind of deductible, you’re comfortable with. It doesn’t make sense to cut corners on your deductible if you actually won’t be able to afford to pay it at claim time. Sure, raising you deductible from 1 to 2% mathematically means that you’ll save enough to make up the difference if you have to file a claim, but are you actually putting those premium savings away every month? Most people, understandably, are not.
The entire discussion about deductibles boils down to two things that we focus on at LFIG:
1) Determining how much risk you, as the insured, are willing to assume.
2) Making sure that you, as the insured, have the knowledge necessary to make informed decisions about your insurance coverage.
As a local, independent insurance agency based here in North Texas, we’re always willing and able to have those conversations.