No, it is not mandatory.  There are different types of homeowner policies available in Texas, including actual cash value and replacement cost.  Replacement cost coverage offers you more protection than actual cash value coverage. For example, if a burglar steals your six-year-old television set, and you only have 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.  Replacement cost coverage, naturally, costs substantially more.