The homeowner's policy you kept won't pay the claim on a rental - and you'll find out at the worst moment. Here's what actually protects a Texas rental.
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The homeowner's policy you kept when you turned the house into a rental won't pay the claim — and you find that out at the worst possible moment. Texas rentals need their own kind of coverage.
Between hail in North Texas, hurricanes on the coast, and flash flooding statewide, Texas leads the nation in weather losses. The right policy is what stands between a covered event and a five-figure bill out of your pocket. Here's what actually protects a Texas rental.
A standard homeowner's policy (an HO-3) is built for an owner-occupied home. The moment you rent the property out, that policy is the wrong instrument — and you can't just bolt "landlord coverage" onto it. What you need is a dwelling policy, and they come in three tiers:
For most single-family and small multifamily rentals, DP-3 is the right call, and it's typically what lenders and property managers require. It's not mandated by Texas law, but going without it means paying out of pocket for structural damage, liability, and lost rent.
A solid landlord policy covers the dwelling structure, liability (if a tenant or visitor is injured and sues), loss of rental income when a covered event makes the unit unlivable (often capped around 20% of dwelling coverage), and accidental tenant-caused damage like a kitchen fire or a burst water line. What it does not cover is where owners get hurt: intentional tenant damage, gradual wear and neglect, and — the big one — flood.
Standard policies exclude flood entirely. Given Texas flash floods, storm surge, and river flooding, treating that as optional is one of the most dangerous assumptions an owner can make. Flood coverage is a separate policy through the NFIP (or a private flood insurer), and lenders require it in FEMA high-risk zones. There's also a tenant-facing duty here: under Texas Property Code Section 92.0135, you must disclose to tenants if the property is in a 100-year floodplain or has flooded in the past five years — and if you don't, a tenant who suffers flood loss can terminate the lease.
Three things deserve special attention on a Texas policy. First, wind and hail deductibles are often separate from — and higher than — your standard deductible, which matters a lot in hail-prone DFW. Second, if you own on the coast, private carriers may not cover windstorm at all, and you may need a policy through the Texas Windstorm Insurance Association (TWIA), which serves the fourteen designated coastal counties. Third, watch vacancy: most policies restrict or drop certain coverages once a home sits empty past a set window (commonly 60 days), so if a unit will be vacant during a turn or renovation, ask about a vacancy endorsement.
One more lever that costs you nothing: require tenants to carry renters insurance. Texas lets you make it a lease condition, and as long as it's clearly stated and applied consistently, it's enforceable. Your policy never covers a tenant's belongings — renters insurance does, which heads off disputes and adds a layer of liability protection for you.
Get a DP-3 on the building, add a separate flood policy if there's any flood exposure (and disclose flood history to tenants), mind your wind/hail deductibles and vacancy rules, and require renters insurance in the lease. That combination is what keeps a Texas weather event from becoming a personal loss. Landlord premiums typically run about $1,500 to $3,600 a year — and they're deductible as a business expense on your Schedule E.
Insurance covers sudden events, not deferred upkeep — which is why staying on top of repairs matters. Premiums are also one line in the full cost of owning a Texas rental, and tenant-caused damage ties back to the deposit.
We help owners confirm they're carrying the right policy, enforce renters-insurance requirements in the lease, and keep the dated photos and records that make a claim go smoothly. If you'd rather not discover a coverage gap at claim time, let's talk.
Talk to Alta ResidentialYes. A standard homeowner's (HO-3) policy is for owner-occupied homes and won't properly cover a rental. You need a dwelling policy — most owners use a DP-3, which covers the structure, landlord liability, and loss of rent.
No. Flood is excluded from standard policies. Given how flood-prone Texas is, you need separate flood coverage through the NFIP or a private insurer — and lenders require it in FEMA high-risk zones.
Yes. Texas Property Code Section 92.0135 requires you to disclose if the property is in a 100-year floodplain or has flooded in the past five years. If you don't and the tenant suffers flood loss, they can terminate the lease.
Yes. Texas lets you make renters insurance a lease condition. As long as it's clearly stated and applied to everyone consistently, it's enforceable — and it protects the tenant's belongings, which your policy never covers.
This guide is general information for Texas rental owners, not legal advice. Statutes and their interpretation change. Confirm specifics with a licensed Texas attorney before acting. Alta Residential · 325 N. St. Paul St., Suite 3100, Dallas, TX 75201 · 214-775-0807.