An overview of landlord’s insurance coverages in Texas:
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 damage to the property was unintentional (fire, weather-related damage, or burst pipes). If the tenant’s damage was intentional, caused by negligence, carelessness, accidents, or abuse of the premises (vandalism), then your landlord policy will not cover it, and the landlord must use the rental security deposit to pay for repairs.
Legal Note: If a Texas landlord uses a portion of the security deposit to repair damages caused by the tenant, the landlord must provide an itemized list of repairs and their costs, to justify the spent portion of the deposit. (Section 92.104(c) of the Texas Property Code)
Does Landlord Insurance Cover Shared Property in Texas?
No, landlord insurance in Texas does not cover shared properties. This is because rentals are residential or commercial properties that a landlord owns, but does not use by themself. If the 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 can cover rent default. If the rent default coverage is purchased, it is subject to the limits stipulated in the policy. Typical rent-default policy can provide replacement rental income for 1-6 months in a given 1-year policy period. The longer the coverage, the more this policy will cost you.
In the event of a renter's default on rent, landlord insurance provides direct payment to the landlord typically after a one-month waiting period. During this month the insurance company will attempt to collect this money from the tenant.
(Related: Evictions in Texas Landlord/Tenant Law)
What is Not Covered by Landlord Insurance in Texas?
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 - if the government changes some or rule, insurance cannot protect from it.
- 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.
DISCUSS YOUR INSURANCE NEEDS WITH CURRENTLY-LICENSED TEXAS INSURANCE AGENTS.
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