It doesn’t matter if your rental property is in Denton, Dallas, Houston, or any other part of Texas.   We can quickly provide insurance coverage the same day or the next day in most cases.

There are some differences in coverage between a normal homeowners policy and a landlord’s rental policy.

With landlord rental property insurance we typically use one of three different forms.  These forms have form names that are common throughout the insurance industry.  The DP-1, DP-2, and DP-3.

All of these insurance forms will include the basics:

Fire, Lightning, & Internal Explosions

Here are the differences between these forms and the coverage that you get with each one:

DP-1 Dwelling Property Basic Form

This “basic form” is exactly what the name suggests.  The basics.

  1. Fire, Lightning, & Internal Explosions
  2. Extended Coverage can be purchased additionally to cover damages from these perils: Windstorm, hail, external explosion, riot, looting,  civil commotion, volcanic eruption (not a high risk in Texas), damage by aircraft, damage by a vehicle (unless it is owned or operated by the person who is insured), smoke, vandalism and malicious mischief.

Claims are normally paid on a ACV or “Actual Cash Value”  basis.

This is something that a lot of investors don’t think about.  If you have a roof on a home that you paid $20,000 for a few years ago, and there is a nice hailstorm, you get actual cash value for your roof replacement.

This is usually MUCH less than what you are going to have to pay to get that roof replaced.

Think of it like a nice pair of dress shoes.  Say you pay $150 for some nice Ecco shoes for a gift for your wife.  Then they get lost after she has them for a year.

What is the “actual cash value”?  It is the value minus depreciation and wear and tear.

You would probably have to go to ebay.com or a local consignment shop.

Those $150 shoes are probably available in REALLY good condition for $50 to $75.

That is actual cash value!

Now do that same calculation to your roof.

Most people want replacement cost for their property.  This is the #1 reason we don’t recommend DP-1 coverage to most landlords.

Your goal in buying insurance for your rental property is to lower your risk and keep your cash flows where you have calculated them.

DP-2 Dwelling Property Broad Form

The “broad form” is the next level of coverage and will cover the following items:

  1. Fire, Lightning, & Internal Explosions
  2. Weight of ice, sleet, or snow against exterior walls or the roof
  3. Damage caused by burglars
  4. Damage caused by falling objects
  5. Glass breakage
  6. Sudden and accidental discharge or overflow of water or stream
  7. Sudden and accidental damage from artificial electrical current
  8. Sudden and accidental cracking, burning, or tearing apart of any water, steam or air system
  9. Freezing of pipes
  10. ALL of the “perils” that are available as extended coverage on the DP-1.

DP-2 pays personal property losses on “actual cash basis”.

Damages to the Dwelling (Coverage A) and other structures (Coverage B) are covered on a Replacement Cost basis.

Back to our analogy about the dress shoes, if there is a loss on those shoes now, the insurance company will see that Ecco is selling those shoes for $150 and you will get $150 as the replacement cost.

If your roof is damaged and you have DP-2 then your claim will be based on the cost to replace the roof and not just the current value of the old roof.

DP-3 Dwelling Property Special Form

DP-3 or Special coverage includes coverage for everything, unless a specific coverage is excluded in the contract.  This is referred to as “Open Peril” coverage.  This is the gold standard for insurance on rental properties for landlords.  This is the best coverage available for your rental or investment properties.

One of the best things about DP-3 is that you get covered for loss of rental income.  When you are an investor operating rentals as a business, you can’t afford to have no rental income for weeks while your property is being repaired.  Landlords who are new or starting investors appreciate this extra coverage to keep income to pay their mortgage and other expenses.

This coverage is for the main building and for other structures on the property.

Which coverage is best for Texas Landlords?

It all depends on how you run your rental business.  We know some people will basically self-insure their rental properties while others want the best coverage they can get for their investments.

The most important thing is to take a look at the policy you currently have and make sure that it is covering you the way you want to be covered.

If you have coverage from one company for $700 per year and a second coverage is $1200 per year, take a look at them and make sure that one isn’t basic while the other is the “Special Form”.

If you would like us to take a look at your current policy or send you a quote for a new policy, just take 3 minutes to share some information below and we will be in touch with you.