What Your Houston Homeowners Policy Doesn't Cover — And Should

The Policy That Covers Almost Everything — Except the Things That Happen Here

A standard Texas homeowners policy (HO-3) is a broad document. It covers fire, lightning, windstorm, hail, theft, vandalism, and a long list of other named and open perils. It provides liability protection if someone is injured on your property. It covers your personal belongings and pays for a hotel if your home becomes uninhabitable.

But in Houston, the things most likely to damage your home — flooding, foundation movement, mold — are either excluded entirely or covered at levels far below what a serious loss would cost. Understanding these gaps is not a reason to panic. It's a reason to close them.

Flood: The Most Important Exclusion

Flood damage is explicitly excluded from every standard homeowners policy in Texas. This is not a quirk of one carrier or one policy form — it is universal. When water enters your home as a result of rising surface water, storm surge, overflowing waterways, or saturated ground, your homeowners policy provides exactly $0 in coverage for the resulting damage.

This exclusion catches people off guard because standard policies do cover water damage — but only from sudden internal sources. A burst pipe, an overflowing bathtub, a washing machine supply line failure: these are covered. What is not covered is water that originates outside your home and flows in.

The practical implication for Houston is severe. Harvey's floodwaters entered homes through doors, windows, air conditioning ducts, and from below through slabs. None of that damage was covered by homeowners policies. Flood insurance — purchased separately through the NFIP or a private carrier — is the only coverage that addresses it.

Mold: Texas Law Created a Sublimit

Mold is Houston's second natural hazard. The city's heat, humidity, and propensity for water intrusion create conditions where mold can establish itself within 24 to 48 hours of a water event. After a surge of large mold claims in the early 2000s — including some that reached seven figures — the Texas Legislature passed House Bill 4 in 2003, fundamentally changing how mold is handled in Texas homeowners policies.

Under current Texas homeowners forms, mold remediation coverage is sublimited — typically capped at $5,000 unless you purchase an endorsement for higher limits. This is not the amount to repair the wall or replace the flooring. It is the amount available for mold testing, treatment, and remediation only. In Houston's humid climate, a mold remediation project following a significant water event can easily cost $15,000 to $40,000 or more.

Mold coverage endorsements that raise the sublimit are available and, for Houston homeowners, we consider them worth asking about. The endorsement premium is typically modest relative to the exposure.

Earth Movement and Foundation: The Soil Problem

Earth movement is excluded from standard homeowners policies — including foundation damage caused by soil movement. In most of the country, this exclusion is primarily aimed at earthquakes. In Houston, it has a different significance: the city sits on some of the most expansive clay soil in the United States.

Houston's soil expands dramatically when wet and shrinks and cracks when dry. As the city's weather cycles between drought and heavy rain, foundations move. Piers shift. Slabs crack. This is a known engineering challenge for virtually every older home in the Houston area, and the resulting foundation damage — which can cost $10,000 to $50,000 or more to repair — is not covered under your homeowners policy.

It is worth understanding that foundation movement resulting from a covered peril may have a different outcome. If a sudden water event causes immediate, documented soil erosion that damages your foundation, that is a distinct situation from slow, ongoing expansive soil movement. The line between the two is often contested in claims, and documentation matters enormously.

Water Backup and Sewer: An Add-On Worth Having

When Houston's drainage infrastructure is overwhelmed — which it is with some regularity — water can reverse course and back up into homes through drains, toilets, and sewer lines. Standard homeowners policies exclude this. It is neither a flood (which requires surface water) nor a covered internal water event (which requires sudden discharge from a plumbing fixture, not a backup from the municipal system).

Water backup and sewer overflow endorsements typically cost $50–$150 per year and provide $5,000–$25,000 in coverage, depending on the policy and the limit you select. For Houston homeowners — particularly those in older neighborhoods with aging sewer infrastructure — this is an endorsement we routinely recommend.

Ordinance or Law: The Costly Gap Nobody Talks About

Imagine your home suffers a fire and 45 percent of the structure is destroyed. The good news: your homeowners policy will pay to rebuild the damaged portion. The challenge: Houston's building codes require that when a structure is damaged beyond 50 percent of its market value, the entire home must be rebuilt to current code. That means updated electrical panels, new plumbing materials, revised HVAC requirements, and potentially elevated foundations in flood-prone areas.

Ordinance or law coverage pays for the additional cost of bringing the undamaged portions of your home up to current code during a covered rebuild. Standard policies include this at 10 percent of your dwelling coverage — on a $400,000 home, that's $40,000. Post-Harvey rebuilds in Houston revealed that code compliance costs could range from $30,000 to well over $100,000 for older homes. We recommend at least 25–50 percent ordinance or law coverage for any home built before 1990.

The Right Approach

A standard homeowners policy is a starting point, not a complete protection plan. For Houston homeowners specifically, we review every policy for mold sublimits, ordinance or law limits, water backup coverage, and flood exposure — because these are the gaps that the local climate and geography most reliably exploit.

None of these endorsements are expensive relative to the losses they protect against. A mold endorsement that raises the sublimit from $5,000 to $25,000 typically costs $50–$100 per year. Adequate ordinance or law coverage costs a few hundred dollars more annually. Water backup coverage runs $50–$150. These are small numbers against the backdrop of what a serious Houston loss actually costs — a flooded home that takes eight months and $120,000 to restore, or a partial fire loss that triggers $80,000 in code upgrades. The goal is a policy you will actually be satisfied with after a claim — not one that leaves you negotiating with an adjuster over sublimits while your home is gutted and your family is living in a hotel.