A Guide to Texas Landlord Insurance

Learn the unique factors that affect the price of Texas landlord insurance, as well as strategies to lower your premiums.

Gemma Smith
Last Updated
May 22, 2023
A Guide to Texas Landlord Insurance

As a property owner in the Lone Star State, having the right landlord insurance coverage is an important step towards safeguarding your investment and ensuring financial stability. The Texas real estate market can be lucrative, but there are unique factors to consider regarding Texas landlord insurance, such as the state's susceptibility to natural disasters like flooding and snowstorms.

In this guide, we'll explore the pros and cons of the state’s rental market and discuss factors to consider when selecting the best landlord insurance plan for your rental property. We'll also share tips for lowering insurance premiums and how Azibo can help you navigate the complex insurance landscape. 

Texas real estate market: Pros and cons

The Texas real estate market, with its numerous large cities such as Houston, San Antonio, Dallas, Austin, and Fort Worth spread across the state, offers a wealth of opportunities for investors. 

The presence of some of the country's largest universities creates a strong demand for rental properties from students. Along with the state's growing tech industry, including the Tesla Gigafactory, Amazon, and Walmart, plus the emergence of Austin as "Silicon Hills," Texas is expected to continue to draw people in. This growth, coupled with a favorable cost of living, makes Texas an attractive market for cash-positive investors seeking a solid rent-to-income ratio.

However, there are some downsides to consider. Home sales and prices have declined as of early 2023, partly due to the current mortgage rates. This situation may cause fluctuations in the market until it stabilizes. Additionally, if the tech industry and startup growth were to decline, it could lead to job losses and a subsequent crash in the rental market.

The biggest concern, though, is the state's vulnerability to extreme weather events. Texas is a vast state, and is exposed to hurricanes on the Gulf Coast, ice and freezing rain in the north, and other weather-related risks that could damage your rental property. 

Insurance rates across the US are increasing, but especially in Texas, where rates are more than double the national average due to the state’s high level of risk.

Prepare for extreme Texas weather with landlord insurance

In addition to standard landlord insurance policies, Texas's diverse weather patterns present unique challenges for investors seeking insurance coverage. The state's geography includes subtropical areas, deserts, and everything in between, resulting in various natural risks that can affect properties.

One of the main factors impacting insurance rates in Texas is the variety of weather-related hazards. The state experiences everything from wind and hail storms to ice storms, hurricanes, floods, and even tornadoes. Other parts of Texas experience wildfires, contributing to the state's high insurance rates. In recent years, severe weather events have intensified, leading to power outages and increased property damage. 

When evaluating insurance options, research the specific risks in the area you're considering and tailor your coverage accordingly. This can help ensure your property is adequately protected from the various hazards common in different parts of the state. For example, properties in regions prone to tornadoes and storms may have higher wind and hail deductibles, while those along the Gulf Coast or in hurricane-prone areas could require costly and often separate flood insurance policies.

Important considerations for Texas landlord Insurance

In addition to weather-related risks, there are other factors that landlords in Texas should consider when purchasing insurance coverage:

  • Sinkhole coverage: Some parts of Texas have a history of sinkholes and underground movement of the earth over time, which could cause damage to your rental property. Ensuring your policy includes coverage for these risks is a smart choice.
  • Theft and vandalism coverage: Highly populated areas are prone to higher crime rates — and in turn, property damage. Theft and vandalism coverage doesn’t refer to damage by a tenant, but rather if someone breaks in and damages a window, spray paints the walls, or causes other structural damage. It’s a good idea to get this coverage if you don't have a property manager who regularly checks on the unit or if you don't live nearby — and especially if the rental property is vacant or under construction.
  • Loss of rent coverage: Loss of rent insurance is recommended in a state like Texas that has a higher risk of hurricanes and flooding. When a rental property is severely damaged by a natural disaster, accident, or tenant negligence, it becomes uninhabitable and unable to be rented out. Due to this forced vacancy, landlords will lose their rental income until the property is repaired. But with rent loss coverage, the financial burden of a vacant rental property is less severe as long as the cause of the claim is covered by the policy.
  • Umbrella insurance: It’s a good idea to get comprehensive liability coverage in this highly populated, litigious state. Umbrella insurance helps protect you and your assets in two scenarios: if your primary insurance policy (regular homeowners, landlord, auto, or watercraft policy coverage) doesn’t cover you for a specific scenario, or if you get caught up in an expensive lawsuit that exhausts the financial limits of your primary plan.

Tips for lowering your Texas landlord insurance premium

Your insurance premium depends on a number of factors, including geographic location, property condition, and claims history — as well as your desired coverage and deductible. Here are a few tips to help you lower your Texas property insurance premiums:

1. Consider a higher deductible

Raising your deductible means taking on more risk in the event of a claim, but it can result in a lower annual insurance premium. For example, increasing your wind and hailstorm deductible from 1% to 2%, or 2% to 3%, can save you money, especially if you have a high dwelling coverage amount. Just make sure you know how much you are responsible for and assess your exposure risk.

2. Bundle policies

Many insurance providers offer discounts when you bundle multiple policies, such as home and auto insurance.

3. Improve property safety

Lower your chances of having to file a claim by installing safety features such as smoke detectors, fire extinguishers, and security systems, which reduce the risk of damage or theft.

4. Maintain good credit

Because some insurance providers use credit scores as one of several factors to determine premiums, maintaining good credit can help lower your rates.

5. Shop around

Take the time to compare rates and coverage options from multiple providers to ensure you're getting the best deal for your Texas rental property.

6. Require renters insurance for tenants

Another way landlords can better protect themselves and lower premiums is by requiring renters insurance for tenants. While renters insurance is not required by law in Texas, some landlords may require it on a case-by-case basis. This is an excellent way to set expectations early on, prepare renters for unexpected situations, and protect your investment.

7. Consider a windstorm inspection

A windstorm inspection can potentially lower your insurance premium by improving your property’s resilience against wind-related elements. Windstorm certificates can serve as evidence of your property's enhanced protection.

For high-risk properties, the Texas Windstorm Insurance Association (TWIA)  offers a solution by providing coverage for wind and hail damage through a separate policy. This program is an option for those who are struggling to obtain coverage from other insurance carriers.  

How important is it to update landlord insurance policies regularly? 

Regularly reviewing and updating your landlord insurance policy helps to ensure you have the right coverage and at the right price. 

When it's time for your policy renewal, take a closer look at the pricing and understand the reason behind any changes — especially if you have filed a claim on that particular property or any other in your name, which may have caused the premium to go up. 

Evaluating what you can do to mitigate the risks can help combat any increase in premiums. For example, if an area has experienced multiple natural disasters, like tornadoes or wildfires, consider making necessary changes to the property, such as trimming trees, updating the roof, or getting a wind inspection. Understanding your insurance policy also helps determine the right coverage for your property.

In addition to evaluating the pricing, checking your policy limits is key. Doing this annually is recommended, especially if you've made any changes that impact the property value, such as renovating a bathroom or kitchen. Make sure your limits are still relevant to what you've done and that your dwelling coverage amount matches what it should be. 

If you have not updated your limits in the last several years, your coverage amount may no longer be appropriate coverage for all of your property improvements. 

Partner with a specialized local insurance agent through Azibo

By following these recommendations and partnering with a reliable insurance provider, you can strike a balance between robust Texas landlord insurance coverage and reasonable premiums. This is particularly significant in Texas, where the unpredictable and varied weather patterns often result in landlords needing to use their wind and hail deductible.

As the only national insurance provider dedicated to rental property owners, Azibo understands the challenges of finding the right landlord insurance coverage in Texas. That's why our team of specialists is here to help streamline your insurance process.

At Azibo, we're committed to helping you make informed decisions about insurance for your Texas rental properties. Many of our property protection options cover fire, lightning, explosion, or vandalism, while our liability protection may cover legal, medical, or settlement expenses in the event of an injury on the property. 

Often, we also offer additional coverage for other structures, loss of rent, windstorms or hail, personal contents, vehicles, aircraft, smoke, water backup, and extended replacement cost. 

Our comparative shopping capabilities help ensure that you're getting the best deal possible, and can help bundle your insurance policies together for potential discounts. We also assist with flood insurance and umbrella policies for additional protection. While these policies may increase your premium, they can fill in any gaps in coverage and offer an extra layer of protection.

We aim to make the insurance process as easy and hassle-free as possible. To that end, you can complete a single online form to get a free quote from the highest quality and most reputable carriers in just a few minutes. Our dedicated team is always available to answer any questions and find the right coverage at a price that fits your budget. Plus, when your policy is up for renewal, we're here to help you understand any changes in pricing and potentially find a better deal.

So if you're a landlord in Texas looking for the right insurance coverage at the right price, contact Azibo today at (855) 920-5152 or click here to request a free quote and learn more about how we can help you.

Looking for more state-by-state insurance guides?

Check out these resources: 

Guide to New York Landlord Insurance

Guide to Florida Landlord Insurance

Guide to California Landlord Insurance

Guide to Illinois Landlord Insurance 

Guide to Pennsylvania Landlord Insurance

Azibo Insurance Services LLC, a wholly owned subsidiary of Azibo Inc, is a licensed insurance producer. Contact us to discuss your specific insurance needs.

Disclaimer: The information provided in this post does not, and is not intended to, constitute insurance advice; instead, all information, content, and materials are for general informational purposes only. This content may not constitute the most up-to-date insurance information. Readers must contact a licensed insurance agent or company to obtain quotes, advice, and guidance with respect to any insurance matter. No reader, user, or browser of this article should act or refrain from acting on the basis of information herein without first seeking the advice of a licensed insurance producer.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Gemma Smith

With 7 years in property management, Gemma serves as a key content strategist at Azibo.com. While excelling in writing, editing, and SEO, she also enhances Azibo's social media presence. Passionately, Gemma educates others to make informed real estate investment decisions in the ever-changing market.

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