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Rental Property Insurance in Texas

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What is rental property insurance? 

Rental properties represent significant investments, and it’s important to protect the finances and time put into these properties. One important way that Texas landlords can help protect their investments is by getting rental property insurance.

Rental property insurance policies give landlords flexible coverage options for their residential investment properties. Policies typically cover properties and the landlord. 

What Texas real estate investors get investment property insurance?

Rental property policies are mainly purchased by Texas landlords with smaller residential investment properties. These policies typically cover buildings with 1-4 units. For example, coverage might be available for single-family homes, duplexes, triplexes, fourplexes, townhomes and condominiums.

A different type of investment property insurance, often with more coverages and higher limits, is usually needed once a property has 5 or more units.

Rental Property Insurance Texas

What insurance coverages do lenders require when financing rental properties?

Most rental property financing comes with a requirement to maintain investment property insurance that has dwelling coverage. Lenders frequently stipulate this coverage as a means of protecting their equity in a property.

Landlords generally find that they need more coverages and higher limits than lenders minimally require. More protections, like contents coverage, loss of income coverage and others, are broadly recommended.

What protections should landlords look for when insuring residential rental properties?

There are multiple coverages that rental property policies might come with, and landlords might want. Some of the more notable ones include:

Possible Coverages Available

  • Dwelling Coverage: Normally insures against damage or loss to the main building and other structures on the property.
  • Landlord Contents Coverage: Normally insures against loss or damage to appliances, landscaping equipment and other items owned by the landlord that are present on the property.
  • Loss of Income Coverage: Normally insures against the loss of rental income when a property becomes uninhabitable due to a covered disaster.
  • Rent Guarantee Coverage: Normally insures against the loss of rental income due to tenants’ inability or failure to pay their rent.
  • General Liability Coverage: Normally insures against common accidents occurring on the property, which could lead to a lawsuit alleging landlord negligence.
  • Legal Assistance Coverage: Normally insures against the costs associated with various legal actions unrelated to liability claims, such as attorney fees incurred during the pursuit of an eviction or judgment.
Dwelling Coverage
Landlord Contents Coverage
Loss of Income Coverage
Rent Guarantee Coverage
General Liability Coverage
Legal Assistance Coverage
Rental Property Insurance Texas

Should landlords get rent guarantee coverage in their rental property policy?

Rent guarantee coverage can provide important financial protection in the event of nonpayment. Whether it’s needed, however, can depend on a landlord’s situation.

First, the many landlords that have financed their properties might find that their lender requires this coverage. Lenders sometimes require this in addition to dwelling coverage, so they have reassurance that the loan can be paid even if rent isn’t.

Second, landlords who rely on their properties for personal income likely should have this coverage. It could help ensure that personal bills can be paid even if tenants don’t pay.

For landlords who primarily own rental properties as long-term investments, this coverage might not be absolutely necessary. If rent payments aren’t necessary to pay immediate bills and there’s no lender requirement, then landlords may consider forgoing the protection.

Before skipping rent guarantee coverage, landlords should consult with an insurance agent specializing in rental properties. A knowledgeable agent can help landlords assess their particular risk exposure to rent nonpayment, and then decide whether to get this coverage.

Can a single rental property policy cover multiple rental properties? 

Yes, many rental property policies can easily be adapted to cover multiple rental properties. This is something that an experienced insurance agent can assist with.

Is it possible to cover mixed-use properties under rental property policies? 

No, rental property policies usually don’t have all of the coverages that mixed-use properties require. Rental property policies are mainly for smaller residential properties, such as single-family homes, condominiums, duplexes, etc.

How can landlords with rental properties in Texas get rental property insurance?

If you need assistance insuring one or more residential investment properties in Texas, reach out to us at McKnight Insurance. Our independent insurance agents can help find rental property insurance that’ll protect your properties well.

McKnight Insurance Services Independent Agency in Mansfield Texas

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