Texas landlord insurance is a specialized type of coverage for property owners that protects rental properties. In some instances, it even provides liability coverage. It’s different from homeowners insurance and renters insurance, but it can be a necessary aspect of renting out property for Texas landlords.
Before considering going without this coverage, Texas landlords should examine the risks their properties might face. As you know, Texas experiences its fair share of weather-related challenges and a wide variety of living situations — from bustling urban landscapes to rural environments where perils are varied,
In this guide, we’ll explore why Texas landlords need landlord insurance, what it covers, and how much it typically costs.
Key Takeaways
Landlord insurance is based on “named perils,” which describe what kinds of damage policies cover at the lower tiers, and an “open peril policy,” which will cover a wide variety of damage except for a list of named exclusions at the higher tiers.
Landlord insurance differs from homeowners insurance and is essential for landlords to protect their rental investment and ensure uninterrupted cash flow.
TurboTenant’s maintenance tracking tool can help landlords stay up-to-date on repair and maintenance challenges and follow the ongoing status of each unit as claims are paid and repairs are made.
Texas Landlord Insurance: Why It’s Essential
Texas is a large state with a diverse landscape and a wide range of environmental and personal challenges for landlords. Landlord insurance can help sustain your rental property in the event of weather or crime-related challenges. Plus, it can even cover lost rent payments resulting from covered perils.
Think about it: Texas landlords often have to worry about hurricanes, tornadoes, hail, and thunderstorms, as well as tenant-related risks like property damage or illegal activity. Ensuring your investment is properly protected is a must for landlords, no matter what kind of property you own or where your units are located in the state.
While we’re on the topic of insurance, consider requiring your tenants to carry renters insurance. While at face value, it may seem as if renters insurance is merely a benefit to tenants, it can help landlords reduce their risk of being sued.
Find out more in our article, “How Landlords Benefit from Renters Insurance.”
Types of Landlord Insurance Coverage
Like other kinds of insurance, landlord insurance has different levels of protection — DP-1, DP-2, and DP-3.
They work on a “named peril” system, meaning specific events trigger coverage for each tier. Not every landlord insurance policy is the same. Be sure to check with your agent or review the documentation associated with the policy to know what is and isn’t covered.
DP-1
The lowest and most affordable level of landlord insurance, DP-1, typically covers nine named perils.
Policies at this level also pay claims at “actual cash value” (ACV), which means the insurance adjuster will factor depreciation into any repair or replacement costs if they’re affected by one of the following events:
- Fire and lightning
- Explosions
- Windstorm
- Hail
- Riots
- Smoke
- Aircraft
- Vehicles
- Volcanic explosions
DP-2
The next tier of coverage is DP-2. This coverage level includes all the named perils in DP-1 but adds nine more.
Policies at this level also pay claims at “replacement cost value” (RCV), which pays claims at the true cost to repair damage associated with the named perils. DP-2 coverage often includes “fair rental coverage,” which protects the landlord’s income by reimbursing lost rent if the unit is rendered uninhabitable due to covered damage.
- The additional perils in DP-2 are:
- Falling objects
- Cracking and bulging
- Freezing pipes
- Electrical damage
- Vandalism
- Snow
- Water or steam
- Glass breakage
- Collapse
DP-3
The highest tier of landlord insurance is DP-3. This coverage is considered an “open peril” plan, meaning damage is generally covered unless it’s caused by something specifically excluded from the policy.
Not only does this level pay claims at the replacement cost value and include fair rental coverage, but it will also typically include liability coverage for injuries on the property. The hazards most commonly excluded from DP-3 coverage are:
- Ordinance or law
- Earth movement
- Water damage
- Power failure
- Neglect
- War
- Nuclear hazard
- Intentional loss
- Government action
- Mold
There’s a lot of information here, and it can seem overwhelming when you first look at it, but in the next section, we’ll take a look at how to choose the right coverage for you and your properties.
How to Choose the Right Landlord Insurance in Texas
When choosing the right landlord insurance, Texas property owners should assess their properties’ specific risks. Since the coverages are pretty specific about what perils they include, landlords might feel they only need one or two of the named perils, which could narrow down the choice.
Another key question relates to how the claims are paid. If your property is newer, meaning the level of depreciation would be generally lower, the lowest tier policy, which pays out in ACV, might work best. However, older properties benefit significantly from an RCV policy, which will result in full payouts for older materials.
No matter which coverage you choose, you’re bound to appreciate the protection that landlord insurance provides.
Top Landlord Insurance Providers in Texas
With so many providers to choose from, it’s important to read through each provider’s policies closely to ensure you’re getting what you need at the right price.
Steadily
Steadily has been providing landlord insurance to landlords across the country since 2017, offering comprehensive coverage, quality customer service, and competitive rates.
Pros
- By focusing only on landlord insurance, Steadily has an edge in offering landlords smart coverage for all kinds of rental properties
- Attentive customer service answers questions or concerns quickly and completely
Cons
- No bundling options are available for other types of insurance
biBerk
biBerk provides landlord insurance with a focus on business. The company offers bundled business insurance options to provide additional liability protection.
Pros
- Uniquely focused on protecting investment in residential and commercial rentals
- Great customer service reviews
Cons
- Policies can be difficult to cancel based on internet reviews
A pure business focus could leave purely residential landlords looking for more options
Geico
A well-known player in the insurance space for years, Geico offers a number of insurance coverages, including landlord insurance.
Pros
- Wide array of bundling options for landlords who already use Geico
- Established legacy of providing great coverage
Cons
- Customer service response times can be slow
- Geico writes policies through third-party underwriting, so landlords should review policy documentation closely
Cost of Landlord Insurance in Texas
As for the cost of landlord insurance, Texas property owners can expect an average of about $1,336/year for the typical policy, depending on the property type they’re insuring.
However, the cost of landlord insurance can vary greatly depending on the risks associated with the property’s location, its characteristics, and the coverage level you need.
For instance, homes made of brick might have lower premiums due to a lower risk of fire, but wood-frame homes might see a slight uptick in cost. Like with any insurance coverage, shop around for the best package that includes the add-ons you might need for your properties.
How TurboTenant Can Help
TurboTenant is property management software designed to make being a landlord easier than ever. We offer:
So, while TurboTenant doesn’t offer landlord insurance, Texas landlords should know that we help make property management easier than ever, and our partnership with Steadily ensures that your property stays protected.
Sign up for a free TurboTenant account today to learn how we make DIY landlording simple, fast, and fun.
Texas Landlord Insurance FAQs
What is the average cost of landlord insurance in Texas?
For landlord insurance, Texas property owners can expect to pay around $1,336 per year in Texas, but this can vary greatly depending on location, hazard risk, property type, and coverage level.
Is landlord insurance required in Texas?
Landlord insurance is not required in Texas.
Can my landlord force me to get renters insurance in Texas?
Renters insurance is not legally required in Texas, but landlords are allowed to include a provision in the lease agreement stating that tenants must carry a policy.