Buying a home is exciting, especially in Texas where the real estate market continues to attract new residents from across the country. But in the rush to close, many first-time homebuyers make insurance mistakes that can cost them thousands down the road.
Here are the five most common insurance mistakes we see at TAP Insurance, and how to avoid every one of them.
Mistake 1: Waiting Until Closing Week to Shop Insurance
Most mortgage lenders require proof of homeowners insurance before closing. If you wait until the last minute, you’re stuck taking whatever quote you can get quickly, which is rarely the best deal.
Start shopping for homeowners insurance at least 30 days before your expected closing date. This gives you time to compare carriers, ask questions, and negotiate coverage, not just price.
Mistake 2: Confusing Purchase Price with Replacement Cost
Your insurance policy should cover the cost to rebuild your home, not the price you paid for it. These numbers are often very different. Land value is included in the purchase price but not in rebuilding costs. Construction costs in Texas have risen significantly since 2020. Custom features, upgraded materials, and code upgrades add to rebuilding expense.
An independent agent can help you calculate accurate replacement cost using construction cost estimators specific to your ZIP code.
Mistake 3: Skipping Flood Insurance
Many new homeowners assume their homeowners policy covers flooding. It does not. Standard homeowners insurance in Texas excludes flood damage entirely.
Even if your property isn’t in a designated flood zone, Texas weather is unpredictable. Flash floods, overwhelmed drainage systems, and heavy spring rains can cause water damage anywhere. In fact, about 25% of all flood claims come from properties outside high-risk flood zones.
If your home is in a Special Flood Hazard Area and you have a government-backed mortgage, flood insurance is federally required. But even in lower-risk areas, a flood policy through the NFIP or a private carrier is a smart investment, especially given Texas leads the nation in flood damage claims.
Mistake 4: Not Understanding Your Wind/Hail Deductible
This catches more Texas homeowners off guard than anything else. Most Texas homeowners policies now have a separate, percentage-based wind and hail deductible, usually 1% to 5% of your dwelling coverage amount.
On a $350,000 home with a 2% wind/hail deductible, you’d pay $7,000 out of pocket before insurance kicks in for hail damage. That’s a big surprise if you were expecting a flat $1,000 or $2,500 deductible.
Before you close, make sure you understand exactly what your wind/hail deductible is and budget accordingly. Products like Sola Insurance can offset this cost for about $300 per year.
Mistake 5: Buying from the First Agent You Call
Many homebuyers call one insurance company, get a quote, and move on. But insurance rates vary dramatically between carriers for the same home.
An independent agent shops your policy across multiple carriers, often finding significant savings. At TAP Insurance, we regularly find differences of $500 to $1,500 per year between the most and least expensive quotes for the same property.
Your Action Plan
If you’re buying a home in Texas, start your insurance search early, get quotes from an independent agent who can compare carriers, ask specifically about your wind/hail deductible, get a flood insurance quote even if it’s not required, and make sure your coverage amount reflects rebuilding cost, not purchase price.
Need help? Call TAP Insurance at (800) 666-2254 or visit tapinsuretx.com. We serve homebuyers across the DFW metroplex, Wise County, and all of Texas.
