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Landlord Insurance in Texas

Landlord insurance in Texas protects policyholders who rent out their homes to tenants. It provides security against various risks attached to rental investments such as water/fire damages, potential claims from disgruntled tenants, and the damages caused by tenants. This policy can only be purchased by people who do not live in the property they rented out. Although landlord insurance is not mandatory by Texas law, having the coverage offers many benefits, including:

  • Protection against rent default by tenants

  • Coverage for injured tenants

  • Protection against legal liability

Most Texas insurance companies provide coverage for various types of rental properties, including apartment buildings, single-family homes, and fix-and-flip properties. However, many do not cover rental properties like AirBNBs. This is partly because the chances of a claim occurring often increase when different people use a property.

What is the Purpose of Landlord Insurance in Texas?

Landlord insurance protects Texas rental-property owners against the risks associated with rental business. It is more flexible than regular house insurance policies. The difference between landlord insurance and regular home insurance is that while the former involves tenants, the latter does not. Although landlord insurance is not mandatory in Texas, many mortgage companies (when it comes to “investment property” mortgages) request that landlords have this insurance plan. An investment property mortgage is a loan used to purchase a property intended for renting out. Furthermore, having landlord insurance coverage gives the lender assurance that you will repay your loan.

Landlord insurance in Texas protects policyholders against risks related to fixtures in the house and the property itself. However, with the increased rate of tenant-related property issues, a more comprehensive policy covers loss of rent, rent default, and property-owner liability. Loss of rent happens when a property is damaged and uninhabitable, and therefore requires repairs. Rent default happens when a tenant fails to pay the rent. In this case, your landlord insurance can pay the rent for a stipulated time. In the event of a liability on the property, the insurance company can pay the compensation claims made by an injured tenant or any other individual.

While landlord insurance offers more coverage and flexibility to people in the rental business, it does not cover everything. Landlord insurance does not provide coverage for damages caused by such things as floods, wars, and natural disasters

What is Landlord Insurance for in Texas?

In Texas, landlord insurance is designed to protect individuals with investment properties from loss of profit or damage to property. After purchasing a landlord insurance plan, the insurance company bears all the risks associated with covered events. Insured events are usually termed as “covered perils,” and they include fire, explosions, damages caused by vehicles, aircraft, vandalism, wind, and hail damage.

According to the TSAHC (Texas State Affordable Housing Corporation), almost 40% of residents are renters. Hence, having landlord insurance is recommended for individuals who own rental properties in the state.

What are the Types of Landlord Insurance in Texas?

In Texas, there are two main types of landlord insurance:

LANDLORD BUILDING INSURANCE

This type of landlord insurance covers the physical property that the insured is renting out. Generally, this includes the house itself and the maintenance equipment on it.

Landlord building protection covers the following:

  • Dwelling: This category helps the insured to pay for the necessary repairs on the rented property when damaged by fire, wind, hail, or other covered perils.

  • Detached structures: This section of the policy helps the policyholder with funds to repair all insured detached structures on the rental property, including the fence and garage.

  • Personal property serving as maintenance tools: Damaged maintenance equipment, such as snowblowers and lawn mowers on a property may be covered by landlord insurance. Personal properties such as a bike or TV on the rental property are generally excluded under this policy.

These coverage types are subject to deductibles and limits. A deductible is the money that the insured pays for a covered peril before the insurer pays out claims. On the other hand, a limit is a maximum amount a policy can pay over a covered loss. Deductible and limit vary across the various plans, and sometimes, the policyholder may be able to set the deductible and limit amounts for coverage.

LANDLORD LIABILITY INSURANCE

This covers the legal or medical fees of a person injured on a property (this applies when the insured’s action is responsible for the injury). A trespasser who gets injured on a property can file a lawsuit against the landlord for injury sustained. Once a court decides that a policyholder is responsible for an individual’s injury, landlord liability will pay all medical expenses subject to the policy’s limit. Generally, policyholders do not have to pay deductibles for a liability claim.

Some optional coverages can be added to a landlord policy depending on the location, state of the rental property, and geographical area. These coverages are:

  • Vandalism: Vandalism is not covered by a standard landlord plan. However, you can purchase vandalism coverage.

  • Burglary: Although a regular landlord insurance policy can pay for repairs when there is a break-in, it typically does not cover the stolen items. You can add this as optional coverage for personal possessions used for property maintenance.

  • Rental property under construction: Individuals who are renovating their rental property or constructing a new dwelling may buy this coverage to protect the building until it is ready for use.

  • Building codes: Building codes are rules governing the designs of buildings. When such standards change, individuals may be required to make changes to the structure of their properties. With this coverage in place, the insurance company may reimburse the policyholders for repair or replacement costs.

Speak with a state-licensed commercial insurance professional. The agent can assess your business needs and guide you to the best choice of coverage to fit them.

Do you Need Landlord Insurance in Texas?

Generally, most landlords in Texas need landlord insurance to cover various rental risks such as loss of rent, property damage, and vandalism. However, whether you need landlord insurance will depend on certain factors. These factors include, the condition of the property, the number of properties owned, type (multi-family, high-rise, or duplex), and location. For instance, you do not need a landlord insurance policy if you are into AirBNBs. For a short term rental property, like AirBNBs, what you need is a short-term rental insurance. Short-term rental insurance covers the liability exposure and property of the policyholder.

Speak with a credible Texas-licensed insurance agent for questions regarding the type of landlord coverage you may need.

How Much Landlord Insurance Do you Need in Texas?

Specific coverage needs often influence how much landlord insurance is needed in Texas. You need landlord building coverage that can rebuild your property in the event of a covered peril. Factors such as property condition, age, location, property upgrades, and claims history, can also determine how much coverage you need.

What Landlord Insurance Coverage Do you Need in Texas?

In Texas, you may buy any of the following landlord insurance coverage:

  • Coverage on commercial property: This provides protection against damages to building structures such as fences, garages, and pools from weather and human activities, whether deliberate or accidental. It also covers various business and maintenance properties. This coverage can also cover buildings under construction.

  • Coverage on general liability: This covers and pays for claims by injured tenants and other people.

  • Income loss coverage: When a building becomes uninhabitable because of certain damages, this coverage pays out to policyholders as compensation for income loss.

Is Landlord Insurance Required by Law in Texas?

No, Texans are not mandated by law to purchase landlord insurance. However, you should get it, especially if you require money for rental investments from a mortgage company.

To help you determine the insurance coverage you need, speak to a licensed Texas commercial insurance agent.

How Does Landlord Insurance Work in Texas?

Getting landlord insurance from any insurer in Texas requires completing an application form. Generally, the insurer will request information concerning the property size, geographical location, total rental units, and the available security systems.

Choosing the desired coverage amount is often the first step in the application process, so make sure that you understand all the coverages, deductibles, and exclusions before commiting to a contract. Once approved, the landlord makes a premium payment and the insurer issues the policy. The newly insured landlord can now rent out the property to the renters without worrying about losing their investment due to a freak accident or an unruly tenant. . In the event of a covered event, the insured landlord can file a claim with the insurer, who then pays the damages, minus the agreed upon deductible.

Coverage remains in effect as long as the premiums are made on time and the renewals of the policy are maintained. Make sure to discuss all your questions about landlord insurance with a Texas-licensed commercial agent, who is legally authorized to provide advice and guidance. the landlord.,

What Does Landlord Insurance Cover in Texas?

Landlord insurance in Texas covers the following:

  • Dwelling place and attached structures: These include apartment, condo, and other structures on a property such as fences and garages.

  • Personal Property: Landlord insurance covers all maintenance equipment on a property. Properties belonging to tenants are not covered here.

  • Loss of income: When a natural disaster renders your property uninhabitable, you may not be able to earn income/rent. In such a situation, you can file a claim with your insurer subject to the limit of the policy. Also, if your tenant defaults or refuses to pay rent, you can file a claim under the landlord insurance plan. However, in certain cases additional coverage may be required to file the claim.

  • Liability: If a tenant, neighbor, or passerby gets injured on your rental property, landlord insurance can cover the cost of medical bills incurred in treating them.

What is Landlord Insurance in Texas Good for?

Landlord insurance is good for protecting a property owner against liability claims from injured or disgruntled tenants and other people. It also mitigates the loss of income in the event that a rental property becomes uninhabitable or a tenant defaults on rent.

What Does Landlord Insurance Typically Include in Texas?

Landlord insurance coverage in Texas typically includes coverage of the landlord’s rental property against fire/water damages, vandalism, wind/hail damages, and liability claims.

Who is Covered by Landlord Insurance in Texas?

Landlord insurance in Texas covers rental property owners. If you own a property meant for only rentals and need coverage from liability and perils, landlord insurance is for you.

What Types of Items Does Landlord Insurance Cover in Texas?

Landlord insurance in Texas covers properties such as apartments, buildings, condos, and detached/street houses.

Does Landlord Insurance Cover - FAQ

Does Landlord Insurance Cover AirBNBs in Texas?

No, Landlord insurance does not cover AirBNBs in Texas. AirBNBs are only short rental properties and are better covered under the short-term rental insurance. Short-term rental insurance is a coverage that protects policyholders from liability and property damage for short-term rentals. This coverage usually runs for less than a year, which makes it suitable for AirBNBs.

Does Landlord Insurance Cover Tenant Damage in Texas?

Landlord insurance may cover tenant damage in Texas if the damaged item is covered by the policy. However, this usually applies to maintenance equipment on the property. You should contact a Texas-licensed insurance agent to learn how this coverage applies to tenant damages.

Does Landlord Insurance Cover Shared Property in Texas?

No, landlord insurance in Texas does not cover shared property. This is because rentals are residential or commercial properties that a landlord owns, but does not use by themself. Speak with a licensed insurance agent if you wish to get insurance for a shared property.

Does Landlord Insurance Cover Rent Default in Texas?

Yes, landlord insurance in Texas covers rent default subject to the limit stipulated in the policy. Insured landlords can file a claim with their insurer when a tenant defaults or refuses to pay rent.

What is not Covered by Landlord Insurance?

Landlord insurance does not pay out claims for damages caused by the following:

  • Flood damage: Damages from a flood are not covered under a landlord insurance plan because it is an incident that happens outside a property. However, water damages like sudden burst pipes that occur inside the house are covered under a landlord insurance plan. Generally, insurance companies rarely cover water damages resulting from negligence, such as damage from a leaky faucet left unrepaired for a long time. If you want to insure your property against flood, you can get a flood insurance plan.

  • Government actions and laws

  • Natural disasters - if the property is located in the disaster prone areas, such as along the gulf coast (exposed to Hurricanes), and in the Tornado alley, consider getting additional disaster insurance coverage.

  • Damages from Mold - mold is considered a maintenance issue, and therefore the landlord is responsible for removing it out-of-pocket.

  • Intentional damage from a tenant - is usually not covered by any policy. Uncovered damage is usually the reason why landlords require a security deposit and renters insurance, prior to signing the lease.

  • Shared apartment - if the landlord resides on the rented premises, pure landlord insurance will not work. Speak to a licensed insurance professional.

  • Your tenant’s personal belongings - are covered by the tenant’s own Renters insurance.

  • War - all typical Texas insurance policies exclude war-related damages from coverage, but such coverage may be available as a policy add-on (rider). Ask your licensed Texas insurance agent about war risk insurance.

  • Earth movements - earthquakes are typically excluded from regular coverage. A separate Earthquake insurance may be purchased, if the building is located in the earthquake zone.

  • Nuclear hazards - the results of possible nuclear disasters are insured by the owners of the nuclear power facilities. Per the Price-Anderson Act, such policies are meant to cover disaster relief in case of a nuclear power plant accident.

What Does Landlord Insurance Typically Exclude?

Landlord insurance typically excludes landlords living in owned properties with some of the space rented out and the tenant’s personal belongings.

What is an Example of Landlord Insurance in Texas?

In Texas, landlord insurance is commonly purchased by owners of rental properties to protect their properties against damages and any medical or legal liability. It also offers income protection. If a rental property becomes uninhabitable due to damage, tenants will leave and there will be no rent until repairs are completed. Rental income coverage will compensate you for the income you would have made from rent during this period.

What is the Most Common Use of Landlord Insurance?

The most common use of landlord insurance in Texas is for protection against loss of rent and property damages.

What is the Difference Between Landlord and Homeowner Insurance?

While homeowner insurance protects a homeowner's personal residence, it does not cover rental properties. Landlord insurance covers only rental properties, in which the landlord does not live.

What is the Difference Between Landlord Insurance and Building Insurance?

Landlord insurance and building insurance are important policies beneficial for renters in Texas. However, while landlord insurance focuses on the liabilities related to renting out a property, building insurance focuses on protecting the property’s structure. Standalone landlord insurance will not cover damages done to the building. This is why some insurers offer landlord building insurance to cover both the building and tenant-related liabilities.

Make sure to discuss your needs with a state-licensed property insurance agent who can go over the best options to cover your risk exposures.

Do I Need Landlord Insurance if - FAQ

Do I Need Landlord Insurance if I Have Short Term Rental Coverage?

Short-term rental insurance provides coverage for properties and liabilities on a property rented out for a short period (usually less than a year). If you operate with a house subletting service, you may not need landlord insurance unless your property is rented out for long-term (over a year). Contact a Texas-licensed insurance agent for professional advice on landlord insurance as it relates to your needs.

Do I Need Landlord Insurance if I Have Homeowner Insurance?

You cannot have homeowner insurance and landlord insurance on the same property. Landlord insurance cannot cover owner-occupied rental properties, and homeowner insurance cannot cover rental properties.

Do I Need Landlord Insurance if I Have Building Insurance?

Yes, you may need landlord insurance if you have building insurance. This is because a building insurance policy only covers damage from natural disasters. However, with both insurance, you can get coverage from liability, loss of income/rent, and natural disasters.

What Happens if you Don't Use Landlord Insurance?

While a landlord insurance policy is not mandatory in Texas, not having one can be risky. Without this coverage, you may have to bear all the costs of repairing or replacing a damaged property, and liabilities in the event of unforeseen circumstances.

Who Can Get Landlord Insurance in Texas?

Any owner of a rental property in Texas who wishes to protect their investment can get landlord insurance. Consult with a licensed agent in Texas to help you find the right plan.

Who Qualifies for Landlord Insurance in Texas?

The following people qualify for landlord insurance in Texas:

  • Owners of rental properties who do not live on such properties

  • Individuals who rent out properties for over a year. Short term rentals such as AirBNBs do not qualify

Who Needs Landlord Insurance?

Property-owners who want to protect their rental investment property against the following may need landlord insurance:

  • Damages caused by fire, wind/hail

  • Loss of income

  • Medical and legal fees incurred by injured individuals on their property

  • Damages to maintenance equipment on the property

What are the Benefits of Landlord Insurance in Texas?

The benefits of landlord insurance in Texas include:

  • Paying outstanding utility bills left by tenants

  • Paying the cost of repairing damages done to the building

  • Paying legal fees in a landlord-tenant dispute in court

PROs and CONs of Landlord Insurance in Texas

The following are the pros and cons of landlord insurance in Texas

PROs of Landlord Insurance

It provides policyholders with loss-of-income, property, and liability protection, thereby making their rental investment profitable.

CONs of Landlord Insurance

Landlord insurance generally costs between 20% to 25% more than a standard homeowner insurance policy. Also, it does not cover damage from natural disasters. It is advisable to speak with a Texas-licensed landlord insurance to discuss the best policy to fit your specific needs.

Is it Worth Getting Landlord Insurance?

Yes, getting landlord insurance is worth it in Texas. It insures the property (against damage), income (when tenants default or refuse to pay rent), and the policyholder (against liability). Speak to a Texas-licensed insurance agent to discuss the type of landlord plan you need.

What Happens if You Don't Have Landlord Insurance?

If you have a rental property in Texas and do not have landlord insurance, you risk bearing the costs of damages and rent loss out-of-pocket.

Why is Landlord Insurance Important for Texas?

Landlord insurance is important because property owners need to mitigate the risks associated with rental property investments. These risks include damage to property by fire/water and loss of rent.

What Happens When your Landlord Insurance Lapses?

When landlord insurance lapses, the insured will not be able to make a claim for any covered event. Generally, insurance companies allow a grace period of approximately one month for policyholders to renew their coverage. To do this, the individual must pay a renewal premium according to the insurer’s pricing model. A licensed insurance agent in Texas can clarify any questions you have about avoiding a lapse of coverage.