What best describes your situation?
Which policy covers a Texas rental, why a homeowners policy will not, and why your property manager belongs on it as an additional insured.
You need a landlord policy, usually written as a dwelling fire policy, covering a home that you own but do not live in. A standard homeowners policy is written for an owner-occupied home and generally excludes rental use. If a management company operates the property, that company is normally added to your policy as an additional insured.
This article explains what each piece of that answer does, where the coverage gaps sit, and which questions to put to your agent. Proper Home Management is a property manager, not an insurance agency. Nothing here is legal advice or a coverage opinion on your policy. Confirm with your own agent and your own attorney before you rely on any of it.
No Texas statute requires it. Two other parties usually do. A mortgage lender requires coverage as a condition of the loan, and a property manager requires it as a condition of the management agreement. Between those two, almost every owner carries it whether the state asks or not.
The more useful question is not whether you must carry coverage. It is whether the coverage you already carry still responds to the way the home is now being used. An owner who moves out, rents the house, and leaves the homeowners policy in place has changed the risk without telling the carrier. That is the single most common insurance mistake we see on a property coming into management.
| Policy type | Written for | Where it fails a rental property |
|---|---|---|
| Homeowners (HO-3) | An owner living in the home | Rental use is generally excluded. A claim can be denied on that basis alone, regardless of what caused the loss. |
| Dwelling fire (DP-1) | A non-owner-occupied home, named perils only | Covers only the perils listed. Anything not named is not covered, and settlement is often at actual cash value. |
| Dwelling fire (DP-3) | A non-owner-occupied home, open perils | The usual right answer for a long-term rental. Still needs loss of rents and liability limits set deliberately. |
| Short-term rental policy | Nightly and weekly stays | Priced around a different occupancy than a twelve-month lease. Paying for it on a long-term rental is paying for the wrong product. |
As a principle: an insurance product is priced against an assumed pattern of occupancy. When the actual pattern differs from the assumed one, nobody discovers the gap until a claim is filed.
Ask your agent about each of these specifically. A policy that is silent on one of them is not a policy that includes it.
Dwelling. The structure itself, at replacement cost rather than actual cash value where you can get it. Actual cash value pays depreciated value, and on a fifteen-year-old roof that difference can run into five figures.
Liability. Someone is injured at a property you own and you are named in the suit. Set the limit against the value of what you own, not against the value of the house.
Loss of rents, sometimes called fair rental value. If a covered loss makes the home uninhabitable, this coverage replaces the rental income during repairs. Owners skip this line more often than any other and notice its absence at the worst moment. A kitchen fire in March does not pause the mortgage.
Water backup. Sewer and drain backup is excluded from most standard property policies and added by endorsement. It is inexpensive and it covers a failure that is common in older Texas housing stock.
Flood, where the address calls for it. Flood is excluded from standard property policies and written separately. Evaluate this at the address, not at the neighborhood. Houston in particular has streets where two sides of the same block price differently.
Landlord-owned contents. If you leave appliances, a washer and dryer, or a lawn mower at the property, those are yours and a policy written around an empty house may not cover them by default.
Most owners have never thought about this. The two terms are not interchangeable and a carrier will not treat them as such.
A named insured is a party the policy is written for, with an ownership interest in the property. That is you. Your lender's interest normally appears separately as a mortgagee. A manager is not a named insured and should not ask to be.
An additional insured is a party extended liability coverage under your policy for claims arising out of the covered operation. That is the correct status for a property manager.
The reason is mechanical rather than legal. When a tenant or a visitor is injured at the property and files suit, the plaintiff typically names everyone connected to the home: the owner, the manager, and sometimes the vendor who last worked there. If the manager is an additional insured, one carrier defends the whole matter under one policy, with one defense counsel and one position. If the manager is not, two carriers each hire counsel, each investigates separately, and the two defenses can end up contradicting each other in front of the plaintiff.
As a principle: a divided defense costs more and works less well than a unified one, and the owner usually pays for the difference.
Most carriers add a manager as an additional insured at little or no cost. Some decline. Ask before you bind a policy rather than after.
Additional insured status does not move your risk onto us. The endorsement extends defense and liability coverage. It does not reassign fault, and a management agreement holds each party accountable for its own conduct. Any owner reading that paragraph as "the manager now covers my exposure" has read it wrong. Read the endorsement itself, and ask your agent what it excludes.
We do not sell insurance and will not publish premium figures we cannot stand behind. What we can tell you is which variables the quote turns on, so the conversation with your agent is short.
Insurance responds to losses. Operations decide how many losses happen and how well documented they are when they do.
Three things matter here. First, maintenance is performed by licensed and insured vendors. An unlicensed contractor working on a property creates exposure for the owner who benefits from the work, not for whoever hired them. Second, we run a photo-documented inspection at move-in and again at move-out, compared side by side, which produces a dated condition record long before anyone needs one. Third, small failures get fixed before they become large ones. A $75 dispatch on a weeping supply line is cheaper than a water claim, a deductible, and a claim on your loss history.
Our pay structure is what makes the third one credible. We charge $75 per maintenance dispatch and put no markups on repairs, ever. A bigger repair bill does not pay us more, so nothing in our compensation argues for letting a small problem grow into a claim. If you want the full arithmetic on that, it is in what property management actually costs in Houston.
We are a property manager describing insurance products we do not sell. Carrier appetite in Texas moves, and it has moved a great deal since 2021. An agent who writes non-owner-occupied policies every week knows more about current availability and current pricing than we do.
We also cannot tell you whether your existing policy responds to your situation. That requires reading your actual policy, including the endorsements and the exclusions, which is your agent's job and not ours. If you want a second set of eyes on the declarations page, bring it to us and we will tell you what our management agreement requires. We will not tell you whether the coverage is adequate for you, because we are not qualified to.
Generally no. Homeowners policies are written for owner-occupied homes and rental use is typically excluded. Tell your carrier the home is now a rental. A repriced policy is a far better outcome than a denied claim.
A tenant's policy covers their belongings and their liability. It does not cover your building. Many Texas leases require tenants to carry it, and requiring it is generally permitted, though the lease has to say so.
Normal wear and tear is an operating cost and cannot be deducted from a deposit under Texas law. Damage beyond that is documented at move-out and deducted from the security deposit with an itemized list. Losses larger than the deposit go to your policy like any other claim. The mechanics are covered in Texas security deposit rules.
Not necessarily. Owners with several properties often move to a blanket or portfolio policy, which can be cheaper and simpler. Ask your agent at three properties rather than at ten.
Usually, yes. A non-owner-occupied policy generally prices higher than a residence policy on the same house. Treat that difference as a cost of the rental, not as a reason to leave the wrong policy in place.
The policy stays in force and the premium stays lower right up until you file a claim. At that point the carrier examines the occupancy, and a misrepresented occupancy is grounds to deny the claim and sometimes to rescind the policy. You save the difference between two premiums and you risk the whole dwelling limit.
Proper Home Management leases and manages single-family homes across Dallas-Fort Worth, Houston, Austin, and San Antonio, plus the surrounding metro areas. We have managed Texas rentals since 2019, under Texas broker license #9015593.
If you are converting a home you used to live in, insurance is one of three things that change on the same day. The other two are your property tax position and your lease. Start with how to choose a property management company in Texas, or email hello@properhomemanagement.com and bring your declarations page to the conversation.
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