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Texas Automobile and Homeowners Insurance Coverages Explained

Automobile Insurance | Homeowners Insurance | Commercial Insurance

Texas Automobile Insurance

Texas law requires you to have auto liability insurance, and if you still owe money on your car, your lender requires that you also carry collision and comprehensive coverage. Auto insurance pays for damages, injuries, and other losses specifically covered by your policy. Read your policy carefully to know exactly what it covers. Pay special attention to the exclusions section, which lists the things your policy doesn´t cover. The front page of your policy is called the declarations page. It contains useful information such as the exact name of your insurance company, your policy number, and the amount of each of your coverages and deductibles.

Texas has an automobile insurance Consumer Bill of Rights. Your company must send you a copy with your policy or policy renewal. Take time to read it to fully understand your rights under Texas law.

Texas Requires Proof of Financial Responsibility!

If you drive in Texas, you must show that you can pay for accidents you cause. Most Texas drivers do this by buying auto liability insurance. Texas law requires minimum coverage of $20,000 per injured person, up to a total of $40,000 for everyone hurt in an accident, and $15,000 for property damage. This basic coverage is called 20/40/15 coverage. However, basic coverage might not be enough if you are held liable for an accident. You should consider buying more than the basic limits. When you buy an auto policy, your insurance company will send you a proof-of-insurance card. You will have to show proof of insurance when you

  • are asked for it by a law enforcement officer
  • have an accident
  • register your car or renew its registration
  • obtain or renew your driver´s license
  • get your car inspected.

Texas law provides severe penalties for violating the state´s financial responsibility laws. A first conviction will result in a fine between $175 and $350. Subsequent convictions could result in fines of $350 to $1,000, suspension of your driver´s license, and impoundment of your automobile.

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Auto Insurance Coverages

The Texas Personal Automobile Policy offers eight types of coverage. Texas law requires you to have basic liability coverage. The other coverages are optional, but if you still owe money on your car, your lender will require you to have collision and comprehensive coverage. The following describes the eight types of coverage available in the Texas Personal Automobile Policy. Auto insurers may offer alternative policies if approved in advance by TDI.

  1. Liability Coverage

    Pays: Other people´s expenses for accidents caused by drivers covered under your policy, up to your policy´s dollar limits. These may include the other person´s

    • medical and funeral costs, lost wages, and compensation for pain and suffering
    • car repair or replacement costs
    • auto rental while their car is being repaired
    • punitive damages awarded by a court.

    Liability insurance also pays attorney fees if you are sued and bail up to $250 if you are arrested.

    Covers: You, your family members, and other people driving your car with your permission, even if they don´t have their own liability insurance and are not named on your policy. You and your family members also are covered when driving someone else´s automobile - including a rental car - but not a car that you don´t own but have regular access to, such as a company car.

    Who qualifies as a family member?

    Your auto policy covers your spouse, blood relatives, in-laws, adopted children, wards, and foster children living in your home, even if not named on the policy. Family members attending school away from home and a spouse living elsewhere during a marital separation also are covered.

  2. Medical Payments Coverage

    Pays: Medical and funeral bills arising from accidents, including those in which the victim was a pedestrian or a bicyclist.

    Covers: You, your family members, and passengers in your car, regardless of who caused the accident.

  3. Personal Injury Protection (PIP) Coverage

    Pays: Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.

    Covers: You, your family members, and passengers in your car, regardless of who caused the accident.

    An insurance company must offer you $2,500 in PIP, but you can buy more. If you don´t want PIP, you must reject it in writing.

  4. Uninsured/Underinsured Motorist (UM/UIM) Coverage

    Pays: Your expenses from an accident caused by an uninsured motorist or if the other driver did not have enough insurance to cover your bills, up to your policy´s dollar limits. Also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to the police.

    • Bodily injury UM/UIM pays without deductibles for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability.
    • Property damage UM/UIM pays for auto repairs, a rental car, and damage to items carried in your car. There is an automatic $250 deductible. This means you must pay up to $250 of the repairs yourself.

    Covers: You, your family members, passengers in your car, and others driving your car with your permission.

    Insurers must offer UM/UIM coverage, but you can reject it in writing.

  5. Collision (Damage to Your Car) Coverage

    Pays: The cost of repairing or replacing your car after an accident, regardless of who was driving or who was at fault. Payment is limited to your car´s actual cash value, minus your deductible. Actual cash value is the market value of a car like yours before it was damaged.

  6. Comprehensive (Physical Damage Other than Collision) Coverage

    Pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, or another cause other than collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Your policy won´t pay for an auto theft unless you report it to the police. Payment is limited to your car´s actual cash value, minus your deductible.

  7. Towing and Labor Coverage

    Pays: Towing charges when your car can´t be driven. Also pays labor charges, such as changing a tire, at the place where your car broke down.

  8. Rental Reimbursement Coverage

    Pays: A set daily amount for a rental car if your car is stolen or is being repaired because of damage covered by your policy.

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Coverage for Stereo Equipment

Your policy won´t pay for tapes, compact discs, cellular phones, citizen band radios, or stereo equipment not permanently installed in your car. However, you can buy endorsements to your policy that provide separate coverage for these items for an additional premium.

Insurance Coverage When Renting a Car

Auto rental agencies offer collision damage waivers as well as liability policies. The collision damage waiver is not insurance. It is an agreement that the rental company will waive its right to recover the costs of the damage to the auto from the renter with certain exceptions, regardless of who is at fault. If you have an auto liability policy, your policy already covers damage to a rental car. Your coverage limit, however, might be less than the value of a rental car. If you rent cars often, it might cost less to raise the liability limit on your auto policy rather than buying collision damage waivers each time you rent. The Texas Automobile Rental Liability Policy provides liability insurance for renters who do not have a personal auto policy.

If you don´t own a car, but borrow or rent cars often, you can buy a non-owner liability policy. A non-owner policy pays for damages and injuries you cause when driving a borrowed or rented car but not for damage to the auto you are driving.

Coverage When Driving in Other States, Canada, and Mexico

Your Texas policy automatically meets the financial responsibility requirements of other U.S. states and Canada. Mexico, however, does not recognize U.S. auto liability policies.

Mexico does not require drivers to have automobile liability insurance. However, drivers can be held criminally and financially responsible for any auto accidents they cause. If you´re in an accident that results in an injury, police in Mexico may detain you until they determine who is at fault. You will have to show that you either have insurance recognized by the Mexican government or the financial ability to pay any judgment against you.

You can buy Mexican liability insurance from Texas agents who specialize in it. Some U.S. companies provide a free endorsement extending your policy´s coverage to infrequent trips of up to 10 days and as far as 25 miles into Mexico. You can buy coverage for longer stays, but it is valid only within 25 miles of the border. Telephone books in border towns list insurance agents that specialize in car insurance for travel in Mexico. Your local agent also might be able to help you find coverage with a Texas-licensed Mexican company.

You also may be able to buy a limited Mexico "tourist" endorsement that extends your Texas liability coverage to pay expenses exceeding those covered by a Mexican liability policy. This endorsement covers trips of any distance and any length of time. Ask your agent which endorsements your insurance company offers.

Coverage of New or Additional Automobiles

If you buy a new or additional car, your policy will automatically cover it, but there are certain limitations you should be aware of.

An additional car automatically has the same coverage as the car with the broadest coverage provided by your policy. For example, if you have two cars - one with liability coverage only and one with liability, collision, and comprehensive - and you buy a third car, the third car will automatically have liability, collision, and comprehensive coverage.

A replacement car automatically has the same coverage as the car it replaced. For example, if you trade in an older car that only had liability coverage, the new car will automatically have only liability coverage.

Be sure to notify your insurance company as soon as possible that you have added or replaced a car and which coverages you want. You could lose coverage on the new car if you wait longer than 30 days.

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Texas Homeowners Insurance

Homeowners insurance protects you from financial losses caused by storms, fire, theft, and other events outlined in your policy. It is important to know what´s in your policy. Make sure you read your policy carefully and understand your specific coverages. It´s also important to know your rights. Texas has a Consumer Bill of Rights for homeowners and renters insurance. Your company must send the Bill of Rights with your policy or renewal.

Don´t wait until you have a claim to review your policy and to know your rights.

Texas Homeowners Insurance Policies

You can buy a dwelling policy that covers only the structure of your house. Or, like most Texans who own their homes, you can buy a homeowners policy, which combines five different types of coverage:

Dwelling - pays for damage to your house and any outbuildings, such as detached garages and storage sheds.

Personal property - pays when household items, including furniture, clothing and appliances, are damaged, stolen, or destroyed.

Liability - protects you against financial loss if you are found legally responsible for someone else´s injury or property damage. A homeowners policy automatically provides $25,000 in coverage. You can buy up to $1 million in coverage for an extra premium.

Medical payments - pays medical bills for people hurt while on your property. It also pays for some injuries that happen away from your home, such as your dog biting someone. A basic homeowners policy pays $500 in medical bills. You can pay extra and get up to $5,000 in medical payments coverage.

Loss of use - pays living expenses if your home is too damaged to live in during repairs. The most common policy pays up to 20 percent of the amount for which your house is insured.

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Types of Texas Homeowners Insurance Coverages

Insurance companies may sell several types of policies in Texas, each with a different level of coverage. Three of the policy forms available for sale in Texas - the HO-A, HO-B, and HO-C - are standardized. This means the policy language and coverages provided by these policies are the same, regardless of the company writing the policy. Although an HO-B policy written by one company will be exactly the same as an HO-B policy written by another company, the two companies may charge different rates.

Companies may offer alternative policy forms, if approved in advance by the Commissioner of Insurance. These policies are not standardized and usually provide varying coverages. Read your policy carefully to know exactly what coverages are included. Some companies may sell more than one policy form. In general, however, a company will offer only one form to its customers. If a company offers you a policy with less coverage than you´d like, ask if other policy forms are available. You also may be able to add additional coverage by buying endorsements to your base policy.

Following is a brief description of the types of policies sold in Texas:

  • HO-A policies provide extremely limited actual cash value coverage of your home and its contents. Only the types of damage specifically listed in the policy are covered. The HO-A is a standardized Texas policy.
  • HO-A amended policies provide more extensive coverage than the base HO-A policy but less coverage than an HO-B. HO-A amended policies are not standardized. Coverage provided by these policies may differ by company.
  • HO-B policies provide replacement cost coverage for most types of damage, except those specifically excluded in the policy. The HO-B is a standardized Texas policy.
  • HO-C policies provide the most extensive coverage, but they are more expensive than other types of policies. The HO-C is a standardized Texas policy.
  • Approved alternative policies offer varying levels of coverage. Companies can sell alternative policies only if the policy form is approved in advance by the Commissioner of Insurance. These policies are not standardized. Coverage may differ considerably from one company to another and from the coverage provided in the standardized Texas homeowners policies.

Generally, HO-B policies provide the most coverage for the price, but some companies do not offer the HO-B policy. For a side-by-side comparison of the coverages provided by the policy forms approved for sale in Texas, visit the website of the Office of Public Insurance Counsel


What Texas Homeowners Insurance Policies Do and Don´t Cover

Most Policies Cover Losses Caused by Most Policies Do Not Cover Losses Caused by
Fire and lightning Flooding
Aircraft & vehicles Earthquakes
Vandalism and malicious mischief Termites
Theft Insects, rats, or mice
Explosion Freezing pipes while your house is unoccupied (unless you turned off the water or heated the building)
Riot and civil commotion Wind or hail damage to trees and shrubs
Smoke Losses if your house is vacant for 60 days or more
Windstorm, hurricane, and hail Wear and tear or maintenance
Sudden and accidental water damage Water damage resulting from continuous and repeated seepage

Companies may exclude coverage for certain losses. For example, if you live on the Gulf Coast, you might receive an endorsement that excludes coverage for wind and hail damage. In areas with a history of hail storms, some companies provide only actual cash value coverage for roofs instead of full replacement cost. Actual cash value pays for damage minus depreciation on the roof, depending on its age and condition.

Most policies will not cover mold remediation beyond that necessary to repair or replace property damaged by a water loss otherwise covered by the policy. The HO-A policy offers no coverage for mold remediation or for damage caused by water leaks, although some companies may offer coverage for sudden and accidental water leaks as an endorsement to the base HO-A policy. Some of the other approved policy forms also cover sudden and accidental water leaks, while others may not. Read your policy or ask your agent whether your policy covers water leaks and mold remediation.

Insurance companies are required to offer you mold remediation coverage. Depending on the company, this coverage will be offered in dollar or percentage increments up to 100 percent of your policy´s limits. If you have questions or concerns about how a mold claim is being handled, or if you need information about how to minimize mold losses, ask your insurance company for a set of guidelines regarding mold claims.

Other Residential Policies

  • Renters: A landlord´s insurance does not cover a renter´s personal property. Renters insurance covers your belongings, provides liability protection, and pays extra living expenses if a fire or other disaster forces you to move temporarily from your rented home.
  • Condominiums: Condominium insurance matches the benefits of renters insurance, and also covers damage to improvements, additions, and alterations to the condominium unit.
  • Townhouses: Townhouses may be insured by either an individual homeowners policy or an association master policy. If a townhouse is owner-occupied and the townhouse association does not have a master policy on the building, you can purchase a homeowners policy on your individual unit. If the association has a master policy, you should get a Texas tenant homeowners policy to insure your personal property.
  • Mobile homes: Mobile homes without wheels and resting on blocks or a permanent foundation qualify for a homeowners policy. However, most mobile homes are insured by a mobilowners policy. A mobilowners policy is actually an auto policy that covers mobile homes used as residences. Mobilowners policies offer extremely limited coverage.
  • Farm and ranch owners: Farm and ranch owners policies insure homes outside city limits on land used for farming and raising livestock. You can pay extra and get coverage for certain farm equipment and outbuildings.

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Maintain Adequate Coverage

Buy enough coverage to avoid a major financial loss if your home is severely damaged or destroyed. This means keeping a realistic dollar amount of coverage on your house.

Replacement Cost Coverage of Your House

The standardized HO-B and HO-C policies provide replacement cost coverage for your house, up to your policy´s dollar limits. Replacement cost is what you would pay to rebuild or repair your home, based on current construction costs. Replacement cost is different from market value. It does not include the value of your land. If you are not sure of the amount it would cost to rebuild your home, your company or agent usually has construction cost tables to help you figure the cost.

To receive full payment (minus your deductible) for a partial loss, such as a hail-damaged roof, you must insure your house for at least 80 percent of its replacement cost. If you insure your house for less than 80 percent of the full replacement cost, the insurance company will pay only part of the expense of a partial loss.

Unless you buy an endorsement increasing your coverage, HO-A policies only provide actual cash value coverage. Actual cash value is the replacement cost of your property minus depreciation. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild it.

If you have an HO-A amended policy or an approved alternative policy, read your policy carefully to know whether it offers replacement cost coverage or actual cash value coverage.

Your Policy´s Dollar Limits are Important

If you insure your house for $100,000, that´s the most you will get if it is destroyed, even if it would cost more to replace it. The Declarations Page on the front of your policy shows how much coverage you have. Talk with your agent or company representative if you have any questions about your insurance limits. If a fire destroys your home, Texas law requires the insurance company to pay the full amount of the policy - even if this amount is more than the replacement cost.

Don´t wait until you have a claim to learn your policy´s limit.

Coverage for Your Personal Property

HO-B policies automatically cover household contents - furniture, clothes, appliances, etc. - up to 40 percent of the amount your house is insured for. This means if you insure your house for $100,000, its contents are insured for up to $40,000. You can get more coverage by paying a higher premium. However, this automatic coverage pays only the actual cash value of damaged, stolen, or destroyed household goods. Actual cash value is an item´s replacement cost, minus depreciation.

You may be able to pay extra and buy replacement cost coverage that ignores depreciation and pays for a new item like the one you lost.

Replacement cost coverage gives you more protection than actual cash value coverage. The following example illustrates why: A burglar steals your six-year-old television set. With actual cash value coverage, you get only what you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company pays to replace your TV with a new set similar to the stolen one.

Companies generally want proof you replaced an item before paying your claim in full. However, if you have an HO-B policy, the company must advance you the first $1,500, plus the depreciated value of any other damaged property, without requiring proof of replacement. After that, the company must pay you within five business days after receiving proof you replaced, restored, or repaired the property. A company can offer to replace the items instead of paying cash, but the choice is yours.

Inventory Your Property

Many people learn after a fire or storm that they didn´t have enough personal property coverage. Making an inventory will help you decide how much insurance you need. It also will simplify claims.

Your inventory should list each item, its value, and serial number. Photograph or videotape each room, including closets, open drawers, storage buildings, and your garage. Keep receipts for major items in a fireproof place.

Homeowners insurance on certain items like jewelry and furs is limited. You may be able to buy more coverage for an extra premium.

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Other Types of Insurance You Might Need

Flood Insurance

Texas ranks at or near the top of the nation in weather-related property damage each year. A large portion of this damage is due to flooding.

Homeowners policies do not cover flood damage. However, the National Flood Insurance Program (NFIP) offers flood coverage in many areas. Local insurance agents sell NFIP flood policies and can tell you about the program in your area.

For more information, call NFIP


If a lender determines that a property is in a special flood hazard area, the borrower is required to purchase flood insurance. A special flood hazard area has a 1 percent chance of being inundated by flood.

Hurricanes and Windstorm Insurance

The Texas Windstorm Insurance Association (TWIA) is the state´s insurer of last resort for wind and hail coverage in the 14 coastal counties and parts of Harris County on Galveston Bay. TWIA provides wind and hail coverage when insurance companies exclude it from homeowners and other property policies sold to coastal residents. You can buy TWIA coverage through local insurance agents if you need it.

When a hurricane enters the Gulf of Mexico (80 degrees longitude and 20 degrees latitude), you can no longer change or purchase new Windstorm coverage.

If you plan to build, add to, or renovate a home or other structure and want TWIA coverage, you or your builder should request an inspection by a TDI windstorm inspector or a Texas licensed professional engineer appointed by TDI. Your agent can tell you how to get an inspection.

Earthquake Insurance

If you are concerned about earthquakes, you can get coverage with a separate policy. The cost is relatively low because earthquakes are rare in Texas.

Extra Coverage (Endorsements)

You might want more coverage for certain items than your policy provides. For an extra premium, you may be able to buy endorsements that expand or increase the coverage on these items. Some of the most common endorsements expand or increase coverage for jewelry, fine arts, camera equipment, coin or stamp collections, computer equipment, and radio and television satellite dishes and antennas.

Personal Umbrella Liability Insurance

If you want more liability coverage than a homeowners policy provides, you can buy a separate umbrella policy. Because policies vary, make sure the agent or company fully explains the coverage.

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Texas Commercial Insurance

Commercial property insurance helps businesses, including farms and ranches, pay to repair or replace buildings, associated structures, and contents damaged by fire, storms, theft, and other events outlined in the policy.

This publication provides general information about the kinds of commercial property coverage that are available in Texas. It can help you evaluate different commercial property policies, understand how rates are determined, and ask the right questions when shopping for insurance. You should review your policy carefully to understand your specific coverage.

Overview - Texas Commercial Property Insurance

Business owners who either own or lease their buildings may purchase commercial property insurance. It’s important for a tenant business to understand that the building owner’s insurance policy will generally only cover the building or structure, not the contents of the building belonging to the tenant. Tenants should purchase their own policies to insure their on-premises property, such as machinery, furniture, and merchandise. An insurance company will evaluate factors such as a structure’s location and construction materials to determine the likelihood of a property loss. The cost of tenant coverage will generally be significantly less than for owned property coverage because the policy will only apply to the leaseholder’s on-premises property and not the building.

Typically, businesses operating on multiple premises are covered by a single policy. In certain instances, such as when two business locations serve different functions and have different risk profiles, separate policies may be needed. This may be the case when a business insures both an office location and a factory, for example.

A commercial property policy may pay based on either the “actual cash value” or “replacement value” of a loss. An actual cash value policy will pay only the amount of the property’s worth at the time of the loss. Worth is determined by the value of the property minus depreciation due to age and normal wear and tear. A replacement value policy will pay to purchase new property of like kind and quality after a loss. In general, a replacement value policy better ensures that a business can fully recover after a significant loss. Replacement value policies are typically more expensive than actual cash value coverage because the policy limits should reflect the cost to replace damaged property with new property.

Almost all policies have a “deductible,” which is an amount the business must pay out of pocket toward the cost of a claim before the insurance company will pay. Generally, the higher a policy’s deductible, the lower its premium will be because the policyholder is accepting a greater share of the cost of any eventual claims. Most policies will also include a “policy limit,” which is a maximum amount the insurer will pay toward any covered loss.

Insurers use a process called “underwriting” to evaluate the likelihood that a given policyholder will file a claim for a loss. The greater the likelihood, the higher the premium will be. If an insurer determines that a business poses too great a risk of a loss, it may decline to issue a policy entirely. If your business is declined for coverage, keep shopping; companies have their own criteria for determining whether to issue coverage and the rate to charge. If one company turns you down or is too expensive, another may be willing to issue coverage or offer a lower premium. There may also be certain steps your business can take to lower its risk and either qualify for coverage or get a lower rate.

Different types of commercial property policies protect against different risks, or “perils.” It’s important to understand which types of losses a policy does and does not cover. A commercial property policy will almost never cover any loss that is either not specifically included in the policy language or is specifically excluded. Therefore, be sure you read a policy carefully before you purchase it. You may need to buy certain specialized policies, such as flood, windstorm, or crime coverage to be protected from those particular losses.

Commercial property insurance is not standardized in Texas. Insurance companies must comply with minimum requirements but have a great deal of flexibility to develop their own policies. As a result, the coverage provided by one insurer’s policy may differ substantially from that of another. When shopping for commercial property insurance, be sure to evaluate the costs and coverages of the policies you’re considering.

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Commercial Insurance Policy Coverages

Commercial property policies in Texas generally fall into one of three categories:

  • Basic form policies typically cover common risks or perils, such as damage caused by fire, lightning, vehicles, aircraft, or civil commotion. Most basic form policies also cover damage from windstorms, except in counties on the Texas coast, where businesses will likely need to purchase a separate policy for windstorm protection.
  • Broad form policies typically provide basic form coverage plus coverage for additional perils, such as water damage, structural collapse, sprinkler leakage, and losses resulting from ice, sleet, or weight of snow.
  • Special form policies cover against all types of losses except those specifically excluded by the policy. Common special form exclusions include losses resulting from flood, earth movement, war, terrorism, nuclear disaster, wear and tear, and insects and vermin.

Additional coverages

Many business owners buy additional coverages. Some are available as separate policies, and others are available as endorsements, or “riders,” that enhance or amend a policy’s base coverage. Generally, adding endorsements to a policy will increase your premium. Ask your agent about these additional coverages:

  • Liability insurance. Protects against the cost of lawsuits and possible court judgments.
  • Business interruption coverage. Pays for actual or projected income lost when a covered peril prevents normal business operations. Coverage forms can be added to a commercial property policy that provide only business income coverage, only extra expense coverage, or a combination of both in the same form.
  • Extra expense coverage. Pays any added costs a business may incur resulting from the need to expedite the return to operations after a covered loss.
  • Building occupied by the insured. Covers a building that the insured regularly uses but does not own. This endorsement can be important if a business leases or borrows a building that’s critical for operations.
  • Newly acquired or constructed buildings. Most commercial property policies allow the insured to add newly acquired property to their policies within a certain time period. If the insurance company is not notified within the time period, typically 30 days, the coverage will not apply. Commercial property policies generally only cover buildings named in the policy.
  • Property off premises. Property located within a covered structure is generally covered by a base policy. Damage to property located off premises may not be covered, or may only be covered to a limited extent. Coverage for off-premises property can often be purchased as an endorsement to the base policy or as a stand-alone policy.
  • Personal property of employees while at insured premises. Generally only property owned by the insured entity is covered, unless this endorsement is added. A coverage extension in the base policy might provide a limited amount of coverage for personal effects and property of others.
  • Valuable papers coverage. Assigns a value to records or other essential information that could be lost. Papers are typically covered only to a limited extent by the base policy.
  • Ordinance or law coverage. Provides an additional amount to cover the increased cost of construction necessary to comply with building codes that might be triggered after a covered loss damages the insured property. This coverage can be added by endorsement, but the base policy might contain a limited benefit.
  • Boiler and machinery coverage. Boilers, air conditioning units, compressors, steam cookers, and electric water heaters are examples of machinery typically covered by this endorsement. Coverage generally extends to specifically listed machinery and any subsequent losses that result, such as when a boiler explosion or water heater leak causes damage to other property. This coverage may also often be purchased as a separate stand-alone policy.

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Coverage against crimes

There are several types of policies that can protect a business from losses resulting from crime. Policies may be issued on a “loss sustained” or “discovery” basis. Loss sustained coverage pays for losses that occur during the policy period, while discovery coverage pays for losses that occur at any time. Both types require that losses be discovered during the policy period or extended reporting period. Common crime coverages include:

  • Loss of glass and money due to theft pays for damage to glass and any loss of money resulting from a break-in.
  • Robbery and safe burglary, property other than money is a more limited form of coverage that does not include money or securities.
  • Forgery or alteration protects a business against forgery or alteration of checks, drafts, promissory notes, or other directions to pay.
  • Theft, disappearance, and destruction coverage insures money, securities, and other property against loss, both on premises or in the custody of an employee or messenger while off premises.

Commercial multi-peril policies

Commercial multi-peril (CMP) policies combine one or more coverage forms, such as commercial property, general liability, inland marine, crime, or commercial auto, in a single policy. A business owner could add other types of coverage to ensure full protection within the convenience of a single policy.

Business owner programs (BOPS) are a common form of commercial multi-peril policy. BOP policies are tailored to the needs of small-business owners and combine property and liability coverage in one policy.

Texas Flood Insurance

Some companies may include flood coverage in their commercial property policies for areas with a low flood risk. However, most flood insurance in the United States is administered by the National Flood Insurance Program (NFIP).

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(For more info please visit the Texas Department of Insurance)


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