Texas Homeowners Policy’s

Homeowners in Grand Prairie, Arlington, Weatherford, Fort Worth, Mansfield, Dallas, and the rest of the State of Texas, need to have a basis understanding of homeowners policies when it comes to buying homeowners insurance. There a several different types of homeowners policies available for the Texas consumer.
Because of “form deregulation”, insurance companies now may offer approved alternative policies. There are differences in coverage, which may be significant. These different forms have been the source of much confusion for consumers looking to purchase a homeowners policy. A tool for comparing coverage is provided by the Office of Public Insurance Counsel. This a good resource for consumers to look and compare the various policies being offered by insurance companies. It is a good way to make sure apples are being compared with apples and not with oranges.
The most common policy is the Texas Homeowners Policy — Form B (HOB). This article is briefly discussing only the HOB.
The HOB policy is an “all-risks” policy with respect to any loss on the dwelling and a “named peril” with respect to any loss to the contents. A note of caution here: Some insurance companies label their policies “all risk”, when in fact they are not. Texas courts have been reluctant to hold the insurance companies who do this, liable for violations of the Texas Deceptive Trade Practices Act (DTPA). This topic is discussed in the case, Muniz v. State Farm Lloyds, a 1998, San Antonio Court of Appeals.
Property coverage in the HOB policy is separated into Coverage “A”, which insures the house, and Coverage “B”, which insures the contents. Separate structures, such as garages and sheds are also insured under Coverage “A”.
Contents, or personal property, under Coverage “B” can be expensive and each policy needs to be read to see the different ways these contents are covered. One relevant part of Coverage “B”, is understanding the limits of coverage for certain items, such as jewelry, cash, guns, etc.
A part of each policy is going to list items or types of items that are not covered in the event of a loss. Exclusions under Coverage “B”, usually includes things like animals, mowers, golf carts, trailers, etc.
Another distinction between Coverage “A” and “B” is that “A” covers losses as the result of all risks unless specifically excluded. “B” only covers twelve specific causes of loss. The Texas Department of Insurance usually has an example of a HOB policy on its web-site.
The HOB Policy contains fifteen exclusions. A few of these include “inherent vice” which is loss from internal decomposition, losses from mold and fungus, foundation settlement, cracking, bulging, shrinking, etc. With these types of losses it is important to get a copy of your policy and contact an experienced Insurance Law Attorney. He or she should be able to read the policy and compare the wording in the policy with the actual facts occurring with the house and determine whether or not the policy should cover the damages.
An HOB policy covers losses that are incurred while the policy is in force. This is the case even if the loss is not discovered until after the policy has expired. Relevant here is what is called in Texas law as the “Fortuity Doctrine”. Fortuity is an inherent requirement of all risk insurance policies. This concept is discussed in the case, Two Pesos, Inc. v. Gulf Insurance Company, which is a 1995 case decided by the Texas Appeals Court in Houston, 14th District.
Sometimes a loss to a dwelling occurs from two events. One of the events is covered by the policy and the other is not. The question then is, How is that handled? The answer seems to be in Texas Insurance Code, Sections 554.001 to 554.002. These sections, adopted in 2005, seem to put the burden on the insurance company of proving how the division of the loss is allocated. Prior to these Insurance Code sections, the law seemed to put the burden of proof on the customer.
The HOB policy defines what a policyholder’s duties are after a loss and for the most part are common sense requirements. Where this part gets dangerous is when the insurance company starts questioning the policyholders truthfulness or culpability in the loss. Regardless of what may have actually happended, this is where legal help needs to be sought.
Finally, the HOB policy is going to have an appraisal clause in it. It’s intent is to serve as a contractual form of alternative dispute resolution in the event of a dispute between the insurance company and their customer. There are some important legal requirements here that only an experienced Insurance Law Attorney is going to be able to effectively work around.