Landlord Insurance Claims in Texas

Key Points

• Landlord insurance in Texas offers coverage for liability claims, property damage, and loss of rental income, but it does not cover intentional acts, or the personal property of the policyholder or tenant.
• When filing a claim, landlords should evaluate the damage, inform their insurer, state the cost of repair or replacement, and submit a claim form. A comprehensive list of damages or stolen items should also be included.
• Texas insurers assign an adjuster to assess the claim, who then investigates and makes a decision to accept, decline, or adjust the claim, typically within 15 business days.
• The claim payout is based on factors like the type of coverage (replacement cost value or actual cash value), policy limits, the agreed-upon deductible, and whether the insurer pays directly to the insured landlords or their mortgage lenders.
• Bodily injury claims can be covered by medical payments coverage and regular liability insurance coverage.
• If rental property is maliciously damaged, landlords should report it as vandalism, which is a covered peril.
• If there are outstanding premiums or if the policy has been terminated due to non-payment, the insurer can deny a claim. The same applies if the claim is fraudulent or not within the policy scope.
• Landlords in Texas typically have two years to file a claim; exceeding this timeframe can lead to claim denial.
• Policyholders can check the status of their claim through their insurance agent, the insurer's claims department, or by directly visiting the insurer. If a landlord believes the claim payout is insufficient, they can dispute the decision by filing a complaint with the Texas Department of Insurance, hiring an independent appraiser, or taking legal action.

Overview

In Texas, you file a landlord insurance claim after a covered peril that causes damage or loss hits your home or an apartment building, or there is a liability claim from your tenant or a visitor.

The most common landlord insurance claims in Texas are:

• Liability - claim is filed when the tenant or a guest gets hurt on the property,
• Property damage - Water Damage from leaks from plumbing due to the neglect by the tenants and Accidental Damage to the walls, doors, and ceilings by the tenants are two of the most frequent property damage claims. Weather Damage claims are filed in the same manner as the homeowner’s insurance policy,
• Lost rental income (Fair rental value coverage) - claim is filed if the property is not generating income due to a covered event, usually while the repairs are being made and the property is vacant.

In such a situation:

• Calculate the value of the loss, damage, or liability claim you incur.
• Inform your insurer about it either in person or through your property insurance agent.
• In your claim, state the cost of fixing or replacing what is damaged or stolen or settling liability claims.
• Your insurer will have to assess your claim in relation to the damage, loss, and other personal liability claims through an insurance adjuster.
• After investigating your claim, your insurer may accept, decline, or adjust the monetary value of your claim.
• If your insurer accepts your claim, your insurer will pay to settle your liability claims and fix or replace the damaged or lost personal property based on your insurance agreement.

How Do I File a Claim for Landlord Insurance in Texas?

To file a claim on your landlord policy, contact your property insurance agent who helped you purchase the coverage to inform them about the loss incurred on your insured rental property. If it is also a personal liability claim which involves bodily injury or lawsuit, you still have to inform your property insurance agent. Follow these steps to file a claim for landlord insurance in Texas:

• Make a list of what is damaged or stolen, or a list of treatments received if it has to do with bodily injury.
• State the cost of repairing or replacing each damaged item and the cost of settling the personal liability claims, such as medical expenses and legal fees, you receive.
• Accurately fill out the claim form provided by your insurer.
• Submit the claim form and other documentation needed to support your claim to your insurer in person, via mail, or through the agent who helped you purchase the policy.

When there is a need to file a landlord insurance claim that has to do with bodily injury, there are two types of coverage that can be used to cover the claim. They are:

• Medical payments coverage

  This coverage is meant to cover the medical cost of treating a third party that sustains bodily injuries on your rental property despite the fact that you are not responsible for the injury. Here, the cause of the accident that leads to the personal injury cannot be linked to your negligence and you are not liable.

• Regular liability insurance coverage

  Basic policy (personal) liability protection covers the medical expenses of people who get injured on your rental property as a result of your negligence. You become liable to cover their medical bills because the accident can be avoided if you take or provide some precautions. Liability coverage also pays for the attorney representation. (Note: If a separate policy umbrella coverage is used, the excess claim amount is filed through the umbrella liability insurer. If the optional coverage is purchased using the same company - the claim process can be more streamlined.)

Your insurer confirms the receipt of your claim and appoints an insurance adjuster to investigate your claim. Your insurer will use the adjuster's report to accept, deny, or readjust your claim, and their decision is communicated to you. If your insurer accepts or readjusts your claim, your insurer will pay you the amount required to fix your property or to settle the liability claims.

The third key component to the landlord claims is the optional coverage of Loss of Rental income.

• Loss of Rent coverage

  Even though rent loss insurance coverage differs, the claim is usually calculated based on the date through which the rent was paid up by the tenants. To process the claim, the landlord usually needs to submit copies of several documents, which help establish the timeline and the stream of rent that needs to be replaced:

• Lease agreement - to show the agreed upon rate of rent,

• Rent accounting ledger - showing the frequency and history of rental payments prior to the covered event,

• Notices that were communicated to the tenants,

• An estimate of the costs that the tenant is liable for at the end of the lease (if any),

  If the property has been already repaired and new tenants are being sought for or they have already moved in, in order to properly cover the claim, the insurer may also request:

• Copy of the ad advertising the property for rent

• Copy of a rental agreement for the newly moved in tenants

To get help with filing a claim, speak with your insurance agent who helped you obtain the coverage or reach out to your insurer and speak with a staff agent.

Is a Claim a Bill in Landlord Insurance?

No, a claim is not a bill in landlord insurance in Texas. A claim is an official request you make to your insurer to inform them of the occurrence of covered loss, damage to your property, or liability caused by a covered peril so that your insurer can cover the cost. A bill, on the other hand, shows the amount required to fix the damages incurred and to settle medical expenses, if someone is injured on your property, or legal fees if someone (a tenant or third party) sues you.

However, a bill can also serve as a claim. For instance, if somebody is injured on your rental property and you have to cover the medical expenses, the medical bill which contains all the treatments that the individual receives can be sent to your insurer. This way, the bill is serving as a claim which may be initiated by a third party (the injured). When this happens, your insurer must contact you before the claim is paid.

How Much of the Provider’s BIll Does Landlord Insurance Cover?

The amount you agree to pay as a deductible determines how much of the provider’s bill your landlord insurance will cover. If your insurer accepts your claim without contesting it, they will subtract your deductible from the bill, and pay what is left. The deductible is the amount of money you are obligated to pay toward an insured loss. For instance, if you file a claim of $5,000 and your deductible is $1,500, your insurer will pay you $3,500, and you will have to pay the remaining $1,500 out of pocket.

How Long Do I Have to File a Landlord Insurance Claim in Texas?

Contact your insurer immediately in the event of a peril that results in damage to your insured rental property or when there is a liability claim that you are responsible for because it involves your rental property. You need to check your insurance policy to know the time frame your insurer gives you to file your claim. According to the Texas Insurance Code, you have two years to file your claim, and if you fail to file your claim within this period, you might not be able to file it again.

What Happens After I File a Claim With My Landlord Insurance in Texas?

When you file your landlord insurance claim in Texas, your insurer will assign it to an insurance adjuster who will examine your insurance claim in relation to your policy. The adjuster will make a recommendation to your insurer either for acceptance, rejection, or readjustment of the claim after investigating your loss. Your insurer has a period of 15 business days to investigate your loss and inform you whether your claim is accepted or denied.

If the adjuster reports that your claim is covered after coming to inspect your property for the loss, the adjuster will determine what your insurer will pay you. This may be the exact amount in your claim or less. After this, your insurer must pay you your claim in part or full within five business days. If your insurer fails to pay the claim within five business days, you can sue them.

Consult with a knowledgeable Texas-licensed landlord insurance agent if you have any issues with your insurance company after filing a claim in Texas.

How Do Landlord Insurance Companies Pay Out Claims in Texas?

In Texas, landlord insurance carriers pay out claims by issuing checks to the insured landlords directly or to their mortgage lenders if there is a mortgage on their insured rental properties. If your claim payout check is issued in favor of your mortgage lender, you can get it from your mortgage lender to fix or replace what was damaged or stolen or settle your liability claims.

Once your claim is accepted, your insurer has five business days to pay the claim. If your insurer fails to pay the claim within the period, you can challenge their decision and even file a complaint with the Texas Department of Insurance. Speak with your property insurance agent in Texas if you want to challenge your insurer's decision. Your Texas-licensed landlord insurance agent can advise you on how to go about it.

Can a Landlord Insurance Company Refuse to Pay a Claim?

Yes, a landlord insurance company can refuse to pay a claim. Your insurer has the right to refuse to pay a claim for reasons that have to do with the claim itself, such as the claim being fraudulent or not within the scope of the policy. However, you can challenge the decision of your insurer if you are not satisfied with their refusal by:

• Speaking with your insurance agent about the rejection
• Hiring a private appraiser to appraise your loss
• Filing a complaint against your insurer with the TDI
• Suing your insurer

Why Do Landlord Insurance Companies Deny Insurance Claims?

Landlord insurance claim denial reasons: Landlord insurance companies typically deny insurance claims for any of the following reasons:

• The purchased landlord insurance policy does not cover the circumstances that caused the loss, damage, or the liability claim, or the damage was intentionally done.
• You have stopped paying your landlord insurance premium, and your insurer has terminated your policy.
• You did not file your claim within the expected time to file your claim.
• The insurance company discovers that the claim is fraudulent or falsified.

What Are the Top Reasons a Landlord Insurance Claim Might Be Denied For Payment in Texas?

The top reasons why your landlord insurance claim may be denied for payment in Texas are:

• Outstanding premiums: The insurer may refuse to pay a claim if the policyholder has an outstanding premium to pay.
• Policy exclusions: If your rental property insurance policy does not cover the claim, your landlord insurance company will reject it. For instance, landlord insurance in Texas does not cover the tenant's personal belongings and flood damage, renters insurance covers such. Also, landlord insurance does not cover the building where the landlord and their family members live; homeowners insurance covers such a property. Therefore, landlord insurance companies will reject claims that have to do with such perils and the landlord’s properties that are personally used by the landlord, not as a rental.
• Delayed notification: The policyholder has a statute of limitation of two years to file a claim. If the policyholder fails to file the claim within this period, the insurer may refuse to pay the claim.
• Coverage Lapse: In this case, your insurer has terminated your landlord insurance coverage due to non-payment of premiums. Your landlord insurance company has the right to deny your claim.
• Deductible higher than the claim: Your insurer may refuse to honor your claim if your claim is lower than or equal to your deductible. If your deductible is $1,500 and you file a claim of $1,000 or $1,500, your insurer will refuse to honor the claim.
• Fraud: Insurance companies may refuse to pay claims if they detect any fraudulent activity. There are different types of fraudulent activities that can lead to the rejection of an insurance claim. They include:
• Application fraud: This arises when the policyholder intentionally provides false information to the insurance company when purchasing the policy. An example of this is valuing a $500,000 property as $700,000.
• False claim fraud: This includes filing a claim for what did not happen or intentionally destroying one’s properties to file a claim for the loss.
• Inflation fraud: This type of fraud includes:
• Increasing the price of fixing or replacing what is damaged or stolen
• Inflating medical costs or legal fees if there is a liability claim
• Falsifying rental income while filing an insurance claim for loss of income on your rental residential property

How Much Does Landlord Insurance Pay Out?

For property damage and theft, the amount of money that your insurer will pay out as a claim for your landlord insurance depends on three factors:

• Coverage type
• Coverage limits
• Your deductible

Coverage Type: Your landlord insurance may be that your insurer should pay the replacement cost value (RCV) or the actual cash value (ACV) of the rental property. If it is the replacement value coverage you opt for, your insurer will pay you the exact amount of money that will cover the replacement cost of the property to its original state. If it is actual cash value, your insurer will consider depreciation to pay the claim. Therefore, your insurer deducts the depreciation value from the property and pays you its current value.

Coverage Limits determine the maximum amounts of coverage offered by the policy. For example, the average liability coverage limit range for most landlord insurance policies in Texas is $200,000 - $300,000. With this amount of coverage, the payout for liability claims can go as high as $300 thousand per claim.

A deductible is what you agree to pay out of your pocket if there is a claim. For instance, you agree to pay $1,000 as a deductible. If you have a claim for a property damage worth $10,000, your insurer will pay you $9,000 if you have replacement value coverage. If you have actual cash value coverage and the cost of the property is now $7,000 as a result of depreciation, your insurer pays you $6,000. In either case, the remaining $1,000 comes from your pocket. Under home insurance, deductibles are applicable to property damage only. Therefore, you are not expected to pay any deductible towards settling any personal liability or loss of income claim.

What If My Insurance Isn’t Paying Enough For My Claim?

The Texas Department of Insurance states the steps you can take if your insurer is not paying enough for your claim.

• You have the right to complain to your insurer and state why you think that what they want to pay is not enough.
• If your policy allows the use of appraisals to resolve issues, you and your insurer can each hire individual appraisers. These appraisers will jointly hire a third appraiser who will examine the estimates of your appraiser and your insurer’s appraiser. The final judgment of the third appraiser determines what your insurer will pay you.
• You can hire a public insurance adjuster to evaluate your loss and your claim. If your adjuster's estimate is higher than what your insurer’s adjuster arrives at, you can challenge this disparity.
• You can lodge a complaint against your insurer with the Texas Department of Insurance via their complaint portal or (800) 252-3439.
• You can sue your insurer if you feel cheated by what they offer to pay as a claim. To get legal help with your insurance claim, you can use the platform provided by TDI.

How Long Can a Landlord Insurance Company Investigate a Claim in Texas?

Landlord insurance carriers in Texas have a maximum of 15 business days to investigate any rental property insurance claim you submit to them. They have to get back to you within this time limit to let you know whether your claim has been accepted, declined, or needs to be modified. If your claim is accepted, your insurer has five business days to send you a check to pay you in full or part.

How Can I Check The Status of My Landlord Insurance Claim?

Your insurer should contact you within 15 business days to let you know the status of your claim. However, if you do not hear from your insurer within this period, you can:

• Contact your insurer through the agent who is helping you with the filing of the claim to know the status of the claim.
• Call the claims department of your insurer to inquire about the status of your claim.
• Visit your insurer in person to ask about the status of your claim.

Do I Need To Tell My Landlord Insurance Company If Someone Maliciously Destroys My Personal Property?

Yes, you need to tell your landlord insurance company if someone maliciously destroys your personal or rental property. Malicious vandalism is one of the perils that rental property insurance covers in Texas. Therefore, you need to tell your insurer about it so that they can cover the cost of restoring your property to its initial state. Contact your licensed agent or your property insurance company to help with the claims process.

When Not To File a Landlord Insurance Claim in Texas?

It is advisable not to file any rental property insurance claim if:

• Your landlord policy does not cover the peril that caused the loss. For instance, landlord insurance in Texas does not cover any flood-related damage or loss. If you file a flood-related claim, your property insurer will deny it. (NOTE: Flood claims are covered by flood insurance)
• Your deductible is more than the cost of fixing or replacing what is damaged or stolen. It is unnecessary to file a claim that is less than your deductible. For instance, your insurer will not honor your claim of $1,000 if your deductible is $1,000 or $1,500.
• You have filed several claims on that same property within a certain period. Filing three non-weather-related claims in three years on your rental property may classify your property as high-risk. Your insurer may decide not to renew your policy if your property is in bad condition or increase your premium if you keep making claims. It is best for you to pay out of pocket if you can afford it so that you can still be covered till when your claim history will not affect your policy. You can also mitigate your risk to avoid more damages to prevent the reoccurrence of loss.

Speak with a knowledgeable and licensed property insurance agent in Texas who can advise you on when not to file claims.

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