Owning a rental property comes with responsibilities and understanding your insurance coverage is one of the most important. At Aqua Tree Insurance, we don’t just help you select the right landlord policy. We also want you to clearly understand when a DP3 policy will pay for damages, and when certain losses may be excluded.

This guide summarizes the most common situations in which a typical Texas DP3 Landlord Policy (Dwelling Fire Form 3) may provide coverage, as well as the situations that are generally excluded.

⚠️ Disclaimer (Important Notice)

The information in this article is for general educational purposes and does not guarantee that every DP3 policy will respond exactly as described. Coverage, exclusions, deductibles, and claim conditions vary depending on the insurance carrier, policy form, endorsements, and the specific circumstances of each property.

All examples and scenarios provided are for illustration only. Your actual coverage is determined solely by the policy issued to you. Aqua Tree Insurance is not responsible for any misunderstanding or incorrect application of this information if it is not compared against your specific policy.

To confirm your exact policy coverage, please review your issued policy or contact Aqua Tree Insurance for assistance.

SECTION 1 – SITUATIONS WHERE YOUR DP3 POLICY MAY PROVIDE COVERAGE

Below are common real-world scenarios that rental property owners experience. If the damage falls under these types of losses, a DP3 policy typically provides coverage, depending on your carrier.

1. Fire & Lightning – Always Covered

This is one of the core protections of every DP3 policy.

Examples of covered losses:

• Electrical fire

• Kitchen fire

• Appliance malfunctions causing fire

• Lightning strike

• Fire spreading from a neighboring home

→ Damage to the structure (roof, walls, electrical systems, built-in components) is generally covered under Coverage A.

2. Windstorm, Hurricane, and Hail Damage

Texas experiences severe wind and hail storms frequently.
Most DP3 policies cover:

• Hail penetrating the roof

• Shingles blown off by wind

• Siding or soffit damage

• Hurricane-related structural damage

→ Payments are usually made on Replacement Cost Value (RCV) unless your policy has a roof limitation.

3. Smoke Damage (Sudden & Accidental)

Covered sources include:

• Kitchen smoke

• Smoke from a malfunctioning heating unit

• Smoke from a smoldering appliance

(Industrial smoke or long-term smoke exposure may not be covered.)

4. Explosion

Examples of covered explosions:

• Water heater explosion

• Gas appliance explosion

• Mechanical malfunction causing a blast

→ Resulting structural damage is typically covered.

5. Vehicle or Aircraft Impact

Though uncommon, DP3 policies usually cover:

• A car hitting your garage

• A drone or aircraft component falling onto the roof

6. Vandalism & Malicious Mischief

This is especially important for rental homes.

Covered examples:

• Broken windows

• Forced entry damage

• Graffiti

• Tenant-caused malicious destruction

Many DP3 carriers include vandalism coverage for tenant-occupied homes.

7. Riot & Civil Commotion

If your property is damaged due to public disturbance or civil unrest, coverage may apply.

8. Collapse (When Caused by a Covered Peril)

Examples:

• Roof collapse caused by storm damage

• Ceiling collapse due to tree impact

DP3 policies cover collapse when the cause is a covered peril.

9. Sudden & Accidental Water Damage (Burst Pipes)

(One of the most valuable benefits of DP3 policies)

Covered examples:

• Pipe burst inside a wall

• A/C condensation line break

• Water heater rupture

• Sudden dishwasher or washing machine hose failure

→ Coverage often includes:

• Repairing walls, flooring, and ceilings

• Tear-out costs to access and replace damaged plumbing

❌ Not covered:

• Long-term leaks (over 14 days)

• Damage due to neglect or poor maintenance

• Sewer or drain backup (excluded unless endorsed)

10. Falling Objects

Examples:

• Tree blown over onto the roof

• Heavy branch falling during a storm

Structural damage must occur first for coverage to apply.

11. Freezing Damage

If freezing temperatures cause:

• Frozen or burst pipes

• Built-in appliance failure due to freeze

→ Coverage may apply if reasonable care was taken, such as maintaining heat or shutting off water when appropriate.

12. Fallen Tree Debris Removal

If a tree falls and damages your property:

→ Most policies cover both debris removal and structural repair.

13. Fair Rental Value (Loss of Rental Income)

If the home becomes uninhabitable due to a covered loss (fire, wind, water damage, vandalism, etc.):

→ Your DP3 policy may pay for lost rental income during the repair period.

14. Liability Protection

Most landlord policies include:

• $300,000 personal liability coverage

• $5,000 medical payments to others

Covered scenarios include:

• Tenant slip-and-fall

• Injuries to guests or service providers on the property

Liability coverage protects you if you’re sued for bodily injury or property damage.

SECTION 2 – SITUATIONS THAT ARE TYPICALLY NOT COVERED

Understanding exclusions is just as important as understanding coverage.

❌ 1. Flood (Rising Water from Outside)

DP3 policies do not cover:

• Flood

• Rising water

• Surface water runoff

• Storm surge

Flood coverage must be purchased separately.

❌ 2. Sewer or Drain Backup

Most DP3 policies exclude:

• Sewer backup

• Drain backup

• Sump overflow

(Only covered if you purchased a separate endorsement.)

❌ 3. Mold / Fungi

Typically excluded:

• Mold remediation

• Mold caused by long-term moisture

• Mold not resulting from a sudden burst pipe

❌ 4. Foundation Movement

Not covered:

• Settling

• Cracks

• Sinking

• Earth movement

Some carriers offer limited coverage ($5,000) if caused by a sudden plumbing leak.

❌ 5. Wear & Tear / Maintenance Issues

DP3 policies do not cover:

• Old, worn-out roofs

• Rust, rot, corrosion

• Gradual deterioration

• Damage caused by lack of maintenance

❌ 6. Pest or Vermin Damage

Always excluded:

• • Mice

  • Rats

  • Termites

  • Insects

❌ 7. Vacancy Over 60 Days

If the property is vacant for more than 60 days before a loss:

Coverage may be void for:

• Vandalism

• Water damage

• Fire

• Theft

Vacant properties require a different policy type.

SECTION 3 – WHEN SHOULD YOU CONTACT AQUA TREE INSURANCE?

We recommend reaching out whenever:

• You experience any kind of water leak

• Storm damage affects your roof or siding

• You are unsure if a situation is covered

• You plan to convert the home to Airbnb or short-term rental

• Your mortgage company requests changes

• You need help filing a claim

We will walk you through the next steps and review coverage based on your actual policy.

CONCLUSION

A DP3 Landlord Insurance policy is one of the best protection tools for rental property owners in Texas. It helps safeguard your investment from:

• Fire

• Wind & hail

• Sudden water damage

• Vandalism

• Liability claims

• Loss of rental income

However, it’s important to understand limitations such as:

• Flood

• Sewer backup

• Mold remediation

• Foundation movement

• Wear & tear

• Long-term leaks

Aqua Tree Insurance hopes this guide helps you better understand your landlord insurance coverage and manage your rental property with confidence.

⚠️ Disclaimer

This article provides general information only. Coverage varies widely by carrier and by policy. Your actual protection is determined by the specific policy issued to you. Aqua Tree Insurance is not responsible for any misunderstanding unless your actual policy is reviewed. Please contact us for a personalized explanation of your coverage.