Your homeowners insurance policy is probably sitting in a drawer somewhere, untouched since the day you signed your mortgage papers. Maybe that was three years ago. Maybe it was ten. And in that time, your home’s value has climbed 40 percent, you finished that master bathroom renovation, your daughter got a dog, and you started working from home with $8,000 worth of equipment in your spare bedroom.
None of that is reflected in your insurance coverage. And that gap between what you own and what you’re insured for? It’s growing every single day.
Haven’t looked at your homeowners policy since you bought your house? Call Schell Insurance at (972) 423-4546 for a year-end coverage review. We’ve spent over 95 years helping Texas homeowners make sure their coverage actually matches their real-world needs. December is the perfect time to fix coverage gaps before they become expensive problems in 2026.
Why December Is the Right Time for This Review
Most people think about their homeowners insurance twice: when they buy the house, and when something goes wrong. That second moment is a terrible time to discover your coverage isn’t what you thought it was.
December gives you a natural checkpoint. The year is ending, you’re thinking about finances anyway, and you’ve got a clear picture of what happened over the past twelve months. Did you make improvements to the house? Buy expensive items? Experience weather events that made you rethink your coverage? All of that is fresh in your mind right now.
Texas home values have been on a wild ride the past few years. Markets across the state saw appreciation of 30 to 50 percent between 2020 and 2023, with some areas even higher. If your coverage limits haven’t increased along with those values, you’re underinsured. And rebuilding your home after a total loss costs more than the market value anyway – construction costs have climbed even faster than home prices.
The timing also matters for seasonal reasons. Spring storm season starts in March across most of Texas. That’s when we see the hail, the tornadoes, the flooding. If your coverage has gaps, you want to fix them now, not after a storm destroys your roof and you’re scrambling to understand what your policy actually covers.
Holiday shopping means your home is full of new stuff right now. Presents under the tree, new electronics, jewelry, furniture. If something happens – a fire, a break-in – do you have any idea whether your current policy limits cover all that new property? Most people don’t.
Coverage Gap #1: Your Dwelling Coverage Is Way Too Low
This is the big one. The coverage amount that determines how much the insurance company will pay to rebuild your home if it’s destroyed – that number is probably wrong. And it’s probably wrong by a lot.
Your dwelling coverage should reflect the cost to rebuild your home from the ground up, not the market value or the amount you paid for it. These are completely different numbers. A house in a great school district might sell for $600,000 even though it would only cost $350,000 to rebuild. But a custom home with high-end finishes might cost $500,000 to rebuild even though the market value is only $425,000.
Construction costs in Texas have increased dramatically over the past few years. Labor shortages, supply chain issues, material cost inflation – it all adds up. The cost to rebuild the exact same house is 25 to 40 percent higher now than it was in 2019. If your coverage limit hasn’t been adjusted, you’re underinsured.
Many policies include inflation guard clauses that automatically increase your coverage by a small percentage each year, typically 2 to 4 percent. That’s helpful, but it might not keep up with actual cost increases. If construction costs in your area increased 8 percent this year but your policy only increased 3 percent, you fell further behind.
The size and features of your home determine replacement cost, not market conditions. A 3,500 square foot house with granite countertops, hardwood floors, and custom cabinetry costs more to rebuild than a 3,500 square foot house with laminate and builder-grade everything. Your insurance company’s estimate might be based on averages that don’t reflect your actual home.
Regional construction costs vary significantly across Texas. Building in the Houston metro area costs more per square foot than building in rural West Texas. Labor availability, material transportation costs, and permit fees all differ by location. Your policy should reflect the actual cost to rebuild in your specific area.
Custom or unique architectural features often aren’t adequately covered by standard dwelling limits. If your home has a specialty roof design, custom tilework, or architectural elements that require skilled craftsmen, standard replacement cost estimates probably undervalue those features. You need your agent to actually understand what makes your home unique.
Coverage Gap #2: Your Personal Property Limits Don’t Match What You Actually Own
Personal property coverage pays to replace your belongings if they’re destroyed or stolen. Most policies set this at 50 to 70 percent of your dwelling coverage. If you’ve got $300,000 in dwelling coverage, you probably have $150,000 to $210,000 in personal property coverage.
Sounds like a lot until you actually add up what you own.
Walk through your house right now and think about what it would cost to replace everything. Every piece of furniture, every appliance, every item of clothing, every dish and utensil in the kitchen, every tool in the garage, every electronic device. People are consistently shocked when they actually do this math. That $150,000 in coverage doesn’t go as far as you think.
Electronics and computers have taken over our homes in ways that weren’t true ten years ago. Multiple TVs, laptops, tablets, smart home devices, gaming systems, cameras, audio equipment. A typical Texas family might easily have $20,000 to $30,000 worth of electronics and computers. Some policies have sub-limits on electronics, meaning they’ll only pay up to a certain amount regardless of your total personal property coverage.
Jewelry, watches, and collectibles are almost always subject to strict sub-limits. Your policy might have $150,000 in personal property coverage, but there’s probably a $1,500 or $2,000 limit on jewelry unless you’ve scheduled specific items. If your spouse’s engagement ring is worth $8,000, you need a scheduled personal articles policy or floater to cover it properly.
Clothing and shoes add up faster than people realize. If you’ve got a family of four with seasonal wardrobes, work clothes, athletic wear, formal wear, and shoes for every occasion, you might have $15,000 to $25,000 invested in clothing. After a total loss, replacing all of that hits hard if your personal property coverage is already stretched thin covering furniture and electronics.
Tools and equipment in the garage often represent significant value. Power tools, lawn equipment, automotive tools, sporting goods, bicycles. Many Texas homeowners have $5,000 to $10,000 worth of tools and equipment stored in their garage or shed. Some policies limit coverage for property stored in detached structures.
Home office equipment matters more now than ever. If you work from home, you might have a standing desk, multiple monitors, a high-end computer, a printer, reference books, and specialized equipment. Some homeowners policies exclude or limit coverage for business property used in a home office. If you’re running a business from home, even part-time, you need to make sure that equipment is covered.
The challenge with personal property coverage is that most people have no idea what their stuff is worth until they have to replace all of it at once. A fire or tornado that destroys your home doesn’t just take the structure, it takes everything you own. And that’s when you discover whether your coverage limits are adequate.
Coverage Gap #3: You’re Not Protected for Water Damage That Isn’t Flood-Related
Water damage is the source of endless confusion and frustration in homeowners insurance. Different types of water damage are covered differently, and most homeowners don’t understand the distinctions until they’re filing a claim.
Standard homeowners insurance typically covers sudden and accidental water damage. A pipe bursts in your wall and floods your living room? Covered. Your water heater fails and dumps 50 gallons on your floor? Covered. These are sudden, unexpected events and they generally fall within your policy’s coverage.
Gradual water damage is almost never covered. If you have a slow leak behind your shower that causes mold and rot over several months or years, that’s considered a maintenance issue. Insurance policies explicitly exclude damage resulting from wear and tear, deterioration, or lack of maintenance. This frustrates people constantly – they discover water damage and want insurance to pay for repairs, but the insurance company denies the claim because the damage developed over time.
Flood damage requires separate flood insurance and is never covered by standard homeowners policies. This trips up Texas homeowners regularly because we think of floods as hurricanes or rivers overtopping their banks. But if water comes up from the ground and enters your home, that’s a flood. If heavy rain overwhelms storm drains and water flows across the ground into your house, that’s a flood. Neither scenario is covered without separate flood insurance.
Sewer backup coverage usually requires a special endorsement. If your municipal sewer line backs up and raw sewage comes into your home through drains, your standard policy probably doesn’t cover it. You need specific sewer backup coverage, which costs maybe $50 to $100 per year but covers cleanup and damage from this incredibly unpleasant scenario.
Sump pump failure often isn’t covered without special endorsements. If you have a sump pump in your home and it fails, causing water damage, you need specific coverage for that. This matters more in some parts of Texas than others, but if you’ve got a sump pump, you need to verify coverage.
Foundation issues caused by water are almost never covered. If water saturates the ground around your foundation, causing it to shift or crack, your homeowners policy isn’t paying to fix that. Foundation coverage is often sold as a separate product by specialized companies, and it’s expensive. Standard homeowners insurance treats foundation problems as maintenance issues or natural settling.
The key with water damage is understanding what triggers coverage and what doesn’t. Sudden and accidental damage from internal sources is generally covered. Gradual damage, external flooding, and ground water issues typically aren’t. If you live in an area prone to flooding or foundation issues, you need additional coverage beyond your standard homeowners policy.
Coverage Gap #4: Your Liability Coverage Is Too Low for Modern Lawsuit Reality
Liability coverage protects you if someone is injured on your property or you’re found legally responsible for damage to someone else’s property. Most standard homeowners policies in Texas include $100,000 to $300,000 in liability coverage.
That sounds substantial until you understand modern lawsuit settlements and judgments.
Medical bills from serious injuries easily exceed basic liability limits. If someone falls on your property and sustains injuries requiring surgery, hospitalization, and months of rehabilitation, medical bills can reach $200,000 or more. If your liability coverage is $100,000 and the bills are $250,000, you’re personally responsible for the remaining $150,000.
Lost wages and pain and suffering damages add massive amounts to injury claims. Medical bills are just the starting point. If someone is injured badly enough that they can’t work for an extended period, they can claim lost wages. Pain and suffering damages can multiply the total value of a claim several times over. A claim that started with $100,000 in medical bills might settle for $400,000 or more when you include all components.
Texas has become increasingly litigious, particularly in personal injury cases. Attorneys know that homeowners insurance policies are available to pay settlements, and they pursue these claims aggressively. If someone is injured on your property, you’re almost certainly getting sued regardless of the actual circumstances.
Dog bite claims are catastrophically expensive and your homeowners liability coverage is what pays them. If your dog bites someone, even once, even if the dog has no history of aggression, you’re liable for medical bills, lost wages, pain and suffering, and possibly punitive damages. Dog bite claims in Texas regularly settle for $50,000 to $150,000. Some breeds trigger higher liability concerns and might even make you uninsurable without special coverage.
Swimming pool liability exposure is significant and often underestimated by homeowners. If you have a pool, you have attractive nuisance liability. If a neighborhood child gets into your yard and drowns in your pool, you’re facing a lawsuit even if you had a fence and a locked gate. Pool-related injury claims are among the most expensive liability claims in homeowners insurance.
Trampolines, tree houses, and play equipment create liability exposure that many parents don’t think about. If your kid’s friend gets hurt on your trampoline, you’re liable. The friend’s parents will claim you were negligent for having dangerous equipment accessible to children. Their health insurance might even sue you to recover costs they paid for treating the injury.
The solution for inadequate liability coverage is umbrella insurance. For $200 to $500 per year, you can get $1 million to $2 million in additional liability coverage that sits on top of your homeowners and auto policies. If you have any assets worth protecting – home equity, retirement accounts, investment accounts – umbrella coverage is cheap protection against catastrophic loss.
Coverage Gap #5: Special Items and Valuables Aren’t Scheduled
Most homeowners policies include sub-limits for certain categories of property. These limits apply regardless of your total personal property coverage, and they’re shockingly low for valuable items.
Jewelry limits in standard policies typically max out at $1,500 to $2,500 for theft. That covers all jewelry combined, not per item. If you have an engagement ring worth $7,000, a watch worth $3,000, and several pieces of nice jewelry, you’re dramatically underinsured. Loss due to fire or other named perils might be covered at full value, but theft – the most common way jewelry goes missing – is subject to that low limit.
Fine art and collectibles are similarly limited. If you collect art, antiques, coins, stamps, or other collectibles, your standard policy probably caps coverage at $2,500 or less. Professional appraisals often reveal that people’s collections are worth far more than they realized. You need scheduled personal articles coverage to properly insure valuable collections.
Firearms are subject to strict limits, usually $2,500 or less. If you’re a hunter or firearms enthusiast with a collection worth $15,000, your standard homeowners policy only covers a fraction of that value. Firearms require specific scheduled coverage or a separate firearms insurance policy.
Musical instruments aren’t adequately covered under standard policies if they’re valuable. If you have a nice guitar, piano, or band instruments, they need to be scheduled. Professional musicians absolutely need scheduled coverage because their instruments are both valuable and essential to their income.
Expensive bicycles are often limited to $1,000 or less under standard policies. If you’re a serious cyclist with a $5,000 road bike, you need scheduled coverage. Standard policies won’t come close to replacing that bike if it’s stolen.
Business property used in a home business typically isn’t covered at all under homeowners policies. If you run a business from home and have inventory, supplies, or equipment related to that business, you probably need a business owners policy or an in-home business endorsement. Homeowners policies specifically exclude business property.
Scheduling valuable items requires listing them individually with descriptions, appraisals, and agreed values. You pay a small additional premium per item or per thousand dollars of coverage. But in exchange, you get coverage with no deductible, broader coverage for causes of loss, and guaranteed replacement at the scheduled value. It’s cheap insurance for items you truly care about.
How Home Improvements Affect Your Coverage Needs
That kitchen remodel you finished in March? Your homeowners policy doesn’t automatically know about it. And if you didn’t update your coverage, you just invested $40,000 in improvements that aren’t properly insured.
Major renovations increase the replacement cost of your home. When you add square footage, upgrade finishes, or replace systems, you’re changing the cost to rebuild your home. A new $60,000 kitchen with custom cabinets and high-end appliances costs $60,000 to replace if your house burns down. If your dwelling coverage hasn’t increased to account for this, you’re underinsured.
Structural additions like rooms, garages, or porches must be added to your policy. You can’t just build a 400 square foot addition without notifying your insurance company. The addition increases your home’s square footage, which increases replacement cost, which requires higher coverage limits. Some policies automatically cover additions in progress up to a certain amount, but once construction is complete, you need to officially update your coverage.
High-end finishes and custom work cost more to replace than builder-grade materials. If you replaced laminate countertops with quartz, or swapped out builder-grade carpet for hardwood floors, your home’s replacement cost went up. Insurance companies calculate replacement cost based on your home’s actual finishes, not generic estimates.
Home offices with built-in features need to be documented. If you converted a bedroom into a home office with custom built-in desks, shelving, and electrical work, that’s value you added to the home. Your insurance company needs to know about it.
Outbuildings, sheds, and detached garages are usually covered at 10 percent of your dwelling coverage. If you built a new shed or workshop, make sure your policy adequately covers detached structures. A $15,000 workshop might not be fully covered if your detached structure limit is only $10,000.
The process for updating coverage after improvements is straightforward. Call your agent, describe what you did, and provide receipts or contractor invoices if needed. Your dwelling coverage will increase, your premium will increase slightly, and you’ll have proper coverage for your improvements. Skipping this step to avoid a small premium increase is penny wise and pound foolish.
The Cost of Not Fixing These Gaps
Understanding coverage gaps is useful only if you actually fix them. Here’s what happens when you don’t.
Underinsurance becomes obvious only after a total loss. If your home burns to the ground and you discover your $300,000 in dwelling coverage won’t cover the $425,000 cost to rebuild, you’re stuck. The insurance company pays their limit and you’re responsible for the rest. Where does that money come from? Savings, loans, family help – none of which you planned for because you thought you were properly insured.
Coinsurance penalties kick in when you’re underinsured by a certain percentage. Many policies include a provision requiring you to insure your home to at least 80 percent of replacement cost. If you fail to meet this threshold, the insurance company applies a coinsurance penalty that reduces your claim payment. You not only get less money because your coverage is too low, you get penalized on top of that.
Out-of-pocket expenses for items that exceed sub-limits are frustrating and avoidable. Finding out after a theft that your $8,000 in stolen jewelry is only covered for $2,500 creates financial stress you didn’t need. Spending $50 per year to schedule that jewelry would have eliminated the problem entirely.
Liability lawsuits can drain your personal assets if your coverage is exhausted. If you’re sued for $600,000 after someone is seriously injured on your property, and your liability coverage is only $300,000, the remaining $300,000 comes from you. Your home equity, retirement accounts, and other assets can be seized to satisfy a judgment. Bankruptcy becomes a real possibility.
Delayed recovery after disasters happens when you’re underinsured. If you can’t afford to rebuild because your coverage fell short, you’re stuck living somewhere temporary while you figure out financing. Months turn into years. Your life is in limbo because you didn’t spend 30 minutes reviewing your coverage.
What a Proper Year-End Review Looks Like
Reviewing your homeowners insurance doesn’t mean casually glancing at your policy once a year. It means systematically checking coverage against your actual needs.
Start with your declarations page, which summarizes all your coverages and limits. Look at dwelling coverage, personal property coverage, liability coverage, and any special limits or endorsements. Does the dwelling coverage match current replacement cost estimates? Is personal property coverage adequate for what you actually own? Is liability coverage high enough to protect your assets?
Calculate replacement cost for your specific home, not generic estimates. Online calculators give you ballpark figures, but they don’t account for unique features of your home. Talk to your agent about getting an updated replacement cost estimate based on current construction costs in your area.
Inventory your personal property at least generally. You don’t need to list every pair of socks, but you should have a sense of major categories. How much would it cost to replace all your furniture? All your electronics? All your clothing? This exercise consistently shocks people into realizing their coverage is too low.
Review sub-limits for jewelry, collectibles, electronics, and other special categories. Pull out your policy or call your agent and ask specifically what the limits are for jewelry, firearms, fine art, business property, and other items. Then compare those limits to what you actually own.
Consider your liability exposure based on property features and lifestyle. Do you have a pool, a dog, a trampoline? Do you host parties or have frequent visitors? Do you have teenage drivers? All of these increase liability risk and might warrant higher coverage or umbrella insurance.
Document recent improvements, purchases, and changes. If you made improvements to your home this year, bought expensive items, or changed how you use your property, your insurance needs to reflect those changes.
Get quotes for additional coverage or higher limits. Once you identify gaps, get actual numbers for fixing them. Most coverage increases cost less than people expect. Scheduling a $10,000 piece of jewelry might cost $100 per year. Increasing liability coverage from $100,000 to $300,000 might cost $40 per year. Umbrella coverage with $1 million in additional liability protection runs $200 to $400 annually.
Texas-Specific Considerations for 2026
Texas presents unique insurance challenges that require special attention in your year-end review.
Hail season runs roughly March through June across most of the state, with peak activity in April and May. If your roof is aging and you’ve been delaying replacement, spring hail could total it. Make sure your roof age and condition are accurately reflected in your policy. Some insurers limit coverage on older roofs or require inspections.
Wind and tornado exposure varies by region but affects the entire state. West Texas, North Texas, and Central Texas all see significant wind events. Your policy’s wind and hail deductible might be separate from your standard deductible and might be percentage-based rather than a flat amount. A 2 percent wind and hail deductible on a home insured for $400,000 means you pay the first $8,000 of storm damage.
Hurricane exposure for coastal Texas homeowners requires separate windstorm coverage through the Texas Windstorm Insurance Association if you’re in certain coastal counties. This coverage is mandatory for mortgaged properties and expensive. If you’re anywhere near the coast, you need to understand exactly what your wind coverage looks like and whether you need TWIA coverage.
Freeze events like the February 2021 storm cause massive water damage claims. Burst pipes from freezing caused billions in insured losses. Your policy covers sudden water damage from burst pipes, but it doesn’t cover gradual damage from pipes that froze and cracked without bursting immediately. Winter preparation becomes part of your insurance risk management.
Wildfire risk has increased in rural and exurban Texas areas. If you live in or near the Hill Country, East Texas forests, or other areas with significant wildfire exposure, your insurance company might require brush clearance around your home or might limit coverage. Some insurers have pulled back from high wildfire-risk areas entirely.
Property values in Texas have been volatile and remain elevated in most markets. Make sure your dwelling coverage reflects current replacement cost, not what your home would have cost to rebuild five years ago. Construction costs have increased dramatically and show no signs of returning to previous levels.
Making Changes to Your Coverage
Once you’ve identified gaps, fixing them is straightforward but requires action.
Call your insurance agent and discuss specific coverage needs. Don’t just say “I want more coverage.” Say “My jewelry collection is worth about $15,000 and I want to schedule it” or “I think my dwelling coverage is too low based on recent renovations.” Specific requests get specific solutions.
Get written quotes for coverage changes before you commit. Coverage increases cost money, and you’re entitled to know exactly how much before you agree to changes. Most increases are modest, but you should see numbers in writing.
Ask about discounts you might be missing. When you’re already reviewing your policy, check whether you qualify for discounts you’re not getting. Bundling home and auto insurance, having a monitored security system, upgrading your roof, or installing impact-resistant windows all might qualify for discounts.
Schedule a specific effective date for changes. If you’re increasing coverage in December, you probably want it effective January 1st for clean record-keeping. But if you’re fixing significant gaps, don’t wait – make changes effective immediately.
Document everything in writing. Get updated declarations pages showing your new coverage limits. Keep copies of endorsements for scheduled items. File everything where you can find it quickly if you need to file a claim.
Review your updated premium and payment schedule. Coverage increases mean premium increases. Make sure you understand the new premium amount and when payments are due. If you pay annually, find out whether you owe additional premium now or if it’ll be included in next year’s renewal.
How Often Should You Review Your Coverage?
Year-end reviews are valuable, but they’re not the only time you should think about your homeowners insurance.
Annual reviews should be standard practice. Even if nothing changed, looking at your coverage once a year helps you stay aware of what you have and whether it still matches your needs. Put a recurring reminder on your calendar for December every year.
Review after major life changes. Marriage, divorce, children, retirement – all of these affect your insurance needs. Kids mean more liability exposure. Retirement might mean more valuable possessions and more time at home. Review your coverage whenever your life circumstances change significantly.
Review after home improvements or major purchases. Don’t wait until year-end if you finished a renovation in June. Call your agent when the project is complete and update your coverage immediately.
Review when you receive your renewal notice. Your insurer sends renewal documents 30 to 60 days before your policy renews. Actually read them. Look at coverage changes, premium changes, and any endorsements or exclusions. This is your opportunity to make changes before the new policy period starts.
Review if your insurance company sends non-renewal or cancellation notices. If your insurer is dropping you, you need to find new coverage immediately. Don’t ignore these notices hoping they’ll go away.
The Bottom Line on Year-End Insurance Reviews
Your homeowners insurance policy should match your actual home, your actual belongings, and your actual risk exposure. For most Texas homeowners, it doesn’t. The gap between adequate coverage and what most people actually have creates financial vulnerability that becomes obvious only after disaster strikes.
December gives you a natural opportunity to fix these problems before spring storm season arrives. The coverage gaps we’ve discussed – inadequate dwelling coverage, insufficient personal property limits, water damage exclusions, low liability coverage, and unscheduled valuables – are fixable problems with straightforward solutions. You just have to take action.
The cost of proper coverage is almost always less than people expect. Increasing dwelling coverage by $50,000 might cost $200 per year. Scheduling $20,000 worth of jewelry might cost $200 annually. Adding $1 million in umbrella liability coverage typically runs $300 per year or less. These are small prices for significant protection.
Want to start 2026 with homeowners insurance that actually protects you? Call Schell Insurance at (972) 423-4546 for a comprehensive policy review. We’ve been helping Texas homeowners get their coverage right for over 95 years, and we know exactly what to look for. We’ll review your current coverage, identify gaps, explain your options, and give you clear pricing for any changes. Don’t wait until you’re filing a claim to find out your coverage isn’t what you thought it was.