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Buying Landlord Insurance in Texas

Key Points

  • Landlord insurance can be obtained at any time and generally begins when the tenants move in, lapsing 30 days after they move out.
  • Over-insuring a property benefits only the insurer, as you pay for coverage that you cannot utilize. Regularly conducting property valuation can prevent over-insurance. Rather than over-insuring, consider broader coverage to protect against a variety of perils.
  • Landlord insurance should ideally cover property, liability, and loss of rental income.
  • Texas provides various landlord insurance plans, including different types of dwelling policies and commercial landlord insurance, each with unique benefits.
  • Insurance policies can be bundled together, such as landlord and auto insurance, potentially saving money.

Landlord Insurance: Purchase Decision Overview & FAQ:

The first step to getting landlord insurance in Texas is to evaluate the cost of your real estate investment. Though landlord insurance is not required by law in Texas, it is a safe way to guide yourself if you manage and rent a personal property. It is also important to know that the homeowners insurance policy will not cover any damages to your rental properties.

When evaluating your real estate investment, make sure to consider the following:

  • Building: This is the substance of your landlord insurance policy. The building represents all fixed structures on landed property. The walls, roof, stairs, and pavement are all part of the building structure. In assessing how much insurance you need, consider the replacement cost of the building after a covered loss such as a fire. Replacement cost is different from market value. Market value is how much your house currently costs, while replacement cost is how much it would cost to replace the building.
  • Property: Property is detachable fixtures in the building or on its premises. For example, a refrigerator, a washer, or an HVAC system in the building that forms part of the rental package is covered property under landlord policy. Your tenants' personal property is excluded from this policy; it is up to the renter to purchase a renters insurance as a separate policy to cover their personal property. Property cost is not based on the current market value but on how much it will cost to replace it in the event of a loss
  • Lost rental income: If a fire razes down part of the building, your tenant may have to move out of the premises for a period to allow for repairs. You will not receive rent for this period. In Texas, the landlord insurance calculates the value of your rent based on your current price and how long it will take to complete repairs in the building. Loss of rent coverage pays you what could have been your rental income if your tenants had not moved out. Additionally you can get covered in case if your tenant does not pay you rent.
  • Liability protection: this represents one of the most crucial coverages in your landlord insurance in Texas. Liability coverage protects you against losses due to claims and litigation when someone is injured on your rental properties. Accidents happen daily, so you must adequately cover premises liability and potential liabilities, so you can cover medical payments costs - if you are presented with a personal injury bill. Usually, many insurance providers will propose a dollar value equivalent to your assets. The advantage of this approach is that it protects you should a personal injury lawyer come after your property as compensation for injury.

Building ordinance coverage can be helpful as it pays the increased costs expected to meet the current building codes when replacing or repairing a rental home. It also pays for demolition and additional cost associated with complying with the established building codes for remodeling and renovation of the parts of your rental home damaged by a covered peril.

After evaluating your needs and considering your budget, the next step is to shop around for insurance quotes offered by authorized property and casualty insurance companies.

Some of the Top Insurance Companies offering Landlord Insurance coverage in Texas

(in alphabetical order)

Liberty Mutual
State Farm

Be sure to compare quotes with a licensed insurance professional. Licensed insurance agents are familiar with the local insurance market and can get you the most affordable landlord policy based on your needs and budget. Agents give you a free landlord insurance quote if you provide them with the property address and your details.

Why Do You Need Landlord Insurance in Texas?

Landlord insurance is rental property insurance, which is not a legal requirement to own property in Texas. If you have a mortgage on your rental property, your mortgage lender will advise you to get landlord insurance. However, as a landlord who allows strangers and/or businesses to use its property temporarily, you need to protect your investment:

  • Single Home
  • Multi-unit dwelling
  • Condo, or a
  • Commercial property, such as an apartment complex, or a strip mall.

Landlord insurance helps cover property owners from perils associated with renting out the property. It gives the landlord liability insurance protection and dwelling coverage in one package. You can purchase additional coverage, including “Lost Rent Payments”, for an extra fee.

In 2023, there were over 9.3 million properties in Texas in need of some type of landlord insurance (approximately 4.5 million residential dwellings and 4.8 million commercial properties).

If you are an owner of a rental property and you do not have landlord’s coverage, you need to discuss your options with a Texas-licensed Residential Property and/or Commercial insurance agent_. _As professionals, they help you interpret your needs regarding what coverage you could require. Based on their experience, they can shop around for quotes and guide you in selecting a policy that best suits your needs.

How To Shop For Landlord Insurance in Texas

When shopping for landlord insurance, look for a state-licensed insurance professional. An experienced property insurance agent understands the current landlord insurance market and value, and can match you with coverage that meets your insurance needs for the most affordable price and from the best insurance company for your niche.

By working with a knowledgeable independent Texas agent, you get options from multiple insurers. Alternatively, you can shop for coverage online and submit an online quote or reach out to your favorite insurance company with a call. As a result, you will be connected to a “captive” agent from the desired company, to go over the coverage and to finalize the quote.

Important note: Captive insurance agents are usually not able to offer alternative insurance coverage options from other insurers, which are not offered by their employer organization. At the same time, not all captive insurers allow independent agents to represent their products. To get the best results, compare results from multiple sources.

What Are My TX Landlord Insurance Options?

In Texas, there are at least three landlord insurance coverage options from which you can choose, depending on your needs and the rental property type:

  • **Liability Coverage **- This coverage pays for legal or medical expenses if anyone gets injured on your property. For example, someone trips and falls over the staircase because of damage to the structure, or an icy walkway causes someone to slip and break an arm
  • **Property Coverage **- Similar to a homeowners insurance policy, this covers your property from damages arising from vandalism, natural disasters such as a fire, and some activities of reckless tenants. Covered property includes buildings, terraces, walkways, and surrounding land owned by the policyholders right up to the boundaries. Others are fixtures such as gas cookers, washing machines, microwave ovens, and every other item that forms part of the rental property. It means that property coverage in your landlord's policy does not cover the part of the building serving as your residence. Also, your tenants' personal belongings are excluded under this policy. Your tenants would have to obtain renters insurance to protect their personal property
  • Loss of income coverage: If you suffer a loss on your property that causes your tenant to evacuate, loss of income provides coverage that pays your missed rent during the period of no use. This coverage does not cover the cost borne by your tenant for finding a temporal living space while the repair is ongoing at their apartment

Depending on your insurance needs, there is room for additional coverage where you can mix and match these coverages in your landlord policy.

How to Qualify For Landlord Insurance in Texas

To qualify for landlord insurance, you must own a property located in Texas, that is primarily meant for rental purposes.

Where to Buy Landlord Insurance in Texas

You can buy landlord insurance from any Texas P&C provider that is registered with the Texas Department of Insurance (TDI), that offers landlord insurance coverage in your county or zip-code. Speak with a licensed and knowledgeable insurance professional who is familiar with the current local landlord insurance offerings.

Where to Get Landlord Insurance

If you already have an active insurance policy on the same property or any different location, discussing it with your current insurance agent/provider is an excellent place to begin. If your insurance provider runs a general lines company, you are likely to find a landlord insurance package within the variety of policies they sell. By bundling the new landlord coverage with the existing policies you will likely get a bulk discount.

After you have checked the quote from the existing insurer, or if you did not have an existing property insurer, ask an independent Texas-licensed insurance agent to check for the best alternatives of coverage. Upon request, an agent can assist you in getting as many quotes as are available within your locality, from which you can choose the plan that best fits your needs.

Where Can I Buy Affordable Landlord Insurance?

While you could buy landlord insurance from any property and commercial insurance company that offers it in your area, the most affordable coverage is usually obtained through one of the two methods:

  • Knowledgeable and experienced property insurance agent, who knows the market and has access to a large selection of insurers for comparison, or
  • Bundling of policies under the same company to maximize the discounts.

Always ask a professional to review your coverage choice prior to committing to the policy.

How Many Landlord Insurance Quotes Should I Compare?

A minimum of three different landlord insurance quotes from different insurers is usually required for balanced comparison when getting landlord insurance in Texas. The more quotes you get, the better your chances of getting a more suitable policy.

How To Apply For Landlord Insurance in Texas

To apply for landlord’s insurance in Texas, you need to follow a few steps:

  • Determine Your Eligibility: If you need help doing this, speak with an insurance agent for professional assistance,
  • Find out your locally available options: You can get quotes from the different insurance carriers available in your area. Your insurance agent can help you with this,
  • Prepare a primary property information document: Compile and document your property information and its value. Ask your property insurance agent to help you. You get a clearer picture of your insurance needs when you compile the property information all in one place. Discuss the findings with the insurance agent and compare your available options based on your identified needs.

Once you decide on your coverage goals, shop multiple insurance carriers for multiple quotes, review the document with your insurance agent and seek clarifications on not fully understood “gray” areas.

Walking through the entire process with an experienced insurance agent is the most effective way to purchase rental property insurance in Texas. Your insurance agent does not charge you; their service is paid by the insurance company you end up choosing.

Who Can Help With Application For Landlord Insurance?

Only insurance professionals licensed in the appropriate type of insurance can help you with an application for landlord coverage - either a residential property or a commercial property insurance agent. If you choose an independent agent, they can help you apply for coverages with multiple insurers. If you apply directly with the insurer, it will assist you by assigning one of their employee agents to help you to compare the plans offered by their organization.

Should I Use An Insurance Agent to Buy Landlord Insurance in Texas?

A licensed Texas insurance agent is required for finding, applying, and buying landlord insurance. The agent serves as your representative, finding you the best landlord policy to provide coverage, and then making sure that all paperwork is filled out properly. If there are any questions about coverage or if premium financing is needed, the agent taps into their resources and resolves any issue that comes up. The agent’s purpose is to make your and your insurer’s life easier, by expediting communication, properly filling out the application paperwork, and continuing to represent the insured during coverage. At least once per year, your agent should help you reassess the insurance needs and make sure that the coverage is adequate for the current market.

Read more about Can You Purchase Landlord Insurance Through an Agent

Can Anyone Get Landlord Insurance in Texas?

Anyone who owns a property that they use for rental purposes in Texas can get landlord insurance. (Owner-occupied properties do not qualify)

Can You Obtain Landlord Insurance at Any Time?

You can obtain landlord insurance anytime you decide to protect your rental properties against unforeseen circumstances. The coverage generally begins as soon as the tenants move in and lapses 30 days after they move out (unless another tenant moves in).

Can I Over Insure My Rental Property in Texas?

Yes, it is possible to over-insure your property but not advisable, since it benefits only the insurer. Over insurance is when you are paying too much for coverage that you cannot utilize. If you could get coverage for a property for $800,000, but its real replacement cost is $750,000, in the event of a covered loss the insurance company will pay the replacement value based on the local market and not the full coverage limit. In this case, the property is overinsured by $25,000, which means that the insured is also overpaying. Although your claims will be based on replacement value, you must understand the valuation index of your property. While some parts depreciate with time, some others appreciate. To ensure that you are not over-insuring your property, conduct a yearly valuation to assess how much it will take to replace them. You can objectively price your policy and review the agreed value based on the statistical data available to your insurer.

Consider a broader spectrum of coverage rather than over-insuring your property with a particular coverage. The more comprehensive the coverage, the more likely you will cover many named perils rather than overpaying for a limited number of perils. Be sure to consult with a Texas-licensed P&C insurance agent for professional advice on getting additional coverage instead of buying more than you need on specific coverage.

What Happens If I Over Insure My Property with Landlord Insurance?

When you over-insure your property with landlord insurance in Texas, you typically pay more than you should as premiums. If your agreed-upon valuation is significantly lower than the chosen coverage of your policy, you are giving away tens of thousands you will never get back even if you file a claim. It is advisable to discuss your options with your insurance agent to determine other means of getting additional protection instead of over-insuring your property.

Should I Over-Insure My Texas Rental Property?

You should not over-insure your property (rental or live-in) with property damage coverage that you will not be able to access after a claim. Insurance will properly cover the damage to your property up to the value of the property, not the maximum coverage.

On the other hand, personal liability and premises liability coverage, which covers the landlord if someone gets hurt on the premises, can be obtained for larger amounts - if desired. You can increase the coverage inside the landlord insurance policy or use a separate Umbrella liability insurance policy to create an even larger coverage.

Discuss your desired coverage limits with a licensed Texas property insurance agent, who can advise you on the most comprehensive and affordable options.

Is Buying Too Much Landlord Insurance a Smart Decision?

No. Buying too much landlord insurance in Texas means you are paying for coverage that you do not need.

What Kind of Landlord Insurance is Best in Texas?

Different landlord insurance policies suit different customers and categories of needs. Regardless of the type of property and the coverage limits, best landlord insurance policies need to cover three main needs:

  • Property,
  • Liability, and
  • Rental income.

While property landlord insurance protects the underlying financial investment in the physical structure of the building and its internal components, liability coverage protects the landlord’s overall wealth. If someone gets hurt on the property and files a lawsuit, the landlord’s total net worth becomes exposed. Quite frequently, if the landlord has multiple rental units or an apartment building, they get umbrella coverage to provide additional liability protection.

Ensuring uninterrupted fair rental value in case the building is vacant during the repairs, landlords usually get the business interruption coverage. This way the stream of income continues regardless of the occupancy.

What Kind of Landlord Insurance Plans Are Available in Texas?

There are two main groups of landlord insurance in Texas:

  • Residential Landlord Insurance
  • Commercial Landlord Insurance

Residential landlord policies in Texas are:

Dwelling Policy 1: This policy provides the most limited coverage. Also known as DP-1, it is a basic policy covering the following losses:

  • Fire and lightning
  • Internal/external explosions
  • Hail and wind storms
  • Smoke
  • Vehicles
  • Volcanic events
  • Vandalism or malicious activity
  • Civil unrest
  • Aircraft

The limitation to DP-1 is that reimbursement is based on actual cash value (ACV) rather than replacement cost. It becomes a disadvantage if there is a need to rebuild.

Dwelling Policy 2: This policy is also referred to as moderate coverage. The main difference between DP-2 and DP-1 is that DP-2 pays replacement costs (RCV) rather than actual cash value. Dwelling policy 2 also incorporates coverage for all perils in DP-1 and damage to your property arising from natural disasters or infrastructural accidents. Examples of covered infrastructural accidents are electrical damage, breakage of glass, damage arising from the weight of sleet or snow, falling objects, and the freezing of pipes. This policy pays for loss of income if the property is vacated for some time to allow for repairs

Dwelling Policy 3: This policy is known as comprehensive coverage. It provides the broadest form of protection from liabilities. While DP-1 and DP-2 policies list specific perils and may deny claims for excluded events, DP-3 is an "open peril" type of policy

Commercial landlord policies in Texas include:

  • Commercial property insurance - to cover the possible property damage (with optional coverage, such as Flood insurance and Wind coverages as a separate policy),
  • Business income - to cover the rental income while the commercial property is being repaired after a loss,
  • Commercial General Liability - to protect the landlord from property damage and bodily injury that was done to anyone while on their property.

A Texas-licensed insurance professional can help you choose the best-suited coverage options according to your insurance requirements.

How To Reinstate Landlord Insurance That You Stopped Paying

In Texas, if you want to reinstate a canceled landlord's insurance, which was stopped due non-payment, do the following:

  • Consult with a licensed property insurance agent to help guide you through the process,
  • Request for and complete the reinstatement application forms, if any. Otherwise, put your request into writing and send it to your insurance provider. You should get an insurance agent to assist you in drafting the request
  • Comply with rules throughout the reinstatement process as set by your insurance provider

You should discuss reinstating your landlord insurance policy with your insurance provider. If you qualify by the terms and conditions of your policy contract, you may be allowed to reinstate your policy. Most insurance providers permit three to five years to reinstate a canceled insurance policy. Generally, your policy term has a grace period (30-31 days), during which you must update your payments to avoid a policy lapse.

How To Find Out What Landlord Insurance I Have

To find out the type of landlord insurance you have in Texas, read your policy contract. If you cannot find your policy document, contact the insurance agent on your policy for information. Otherwise, you may engage the insurance company directly. You can look up the address of your insurance provider through their website or by looking through any email communications you have had.

How Do I Know If I Have Landlord Insurance Coverage?

First off, no one can purchase a landlord insurance policy for your property without your consent. If you are heir to insured rental property in Texas, the policy documents should be part of your holding documents. Also, if you are up to date in paying your landlord insurance premium, you should always expect to have coverage. Besides, if you are about to lose coverage, your insurance provider will contact you ahead of time.

Can Landlord Insurance Be Combined With Other Insurance To Become More Affordable?

Yes. You can combine a landlord insurance policy in Texas with other insurance types to get an overall lower rate. Bundling policies with the same insurance company may qualify you for discounts. If you are looking to buy a cost-effective landlord policy in Texas, engage a licensed insurance agent. A knowledgeable agent can help you bundle policies to maximize the discounted rates.

Can I Bundle Landlord and Auto Insurance?

Yes. In Texas, you can bundle landlord and auto insurance policies together to save money, as long as the coverage is of the same type: Private residential with private auto, and Commercial property with commercial auto. If you can find multiple insurance products from the same insurance carrier you will almost always save even more money by bundling them.

Your Texas-licensed insurance agent can show you how much bundling can save you in the long run.

Is Landlord Insurance a Good Deal for TX Homeowners?

Yes, having landlord insurance in Texas is a good deal. In fact, as a rental property owner, you need to protect your investment and your bottom line. The property damage from unforeseen events and liability lawsuits from the tenants can cause you to spend tens of thousands or more out of your pocket if you do not have this coverage. With a properly structured landlord insurance policy, your insurance company protects you from both events. Speak with a knowledgeable and licensed Texas property insurance agent to help you structure the best deal for your needs.

How Do I Renew My Landlord Insurance in Texas?

Your landlord insurance provider will notify you by mail or email to renew your insurance in Texas before it expires. Insurance companies always do this before the end of the policy term. If you are not clear about any details, immediately contact your insurance agent or the insurance provider for clarification. If you are considering switching insurers, the renewal period may be the best time to speak with a Texas-licensed insurance agent, to discuss alternative options of coverage.

Can You Purchase Landlord Insurance Through an Agent?

How Does Landlord Insurance Work in Texas?

What is Covered by Landlord’s Insurance - a Detailed Texas Guide

How Much is Landlord Insurance in Texas?

How Are Landlord Insurance Claims Handled in Texas?

How to Pay for Landlord Insurance

How to Make Changes to Landlord Insurance

How to Replace Landlord Insurance

How to Cancel Landlord Insurance