Texas Landlord Insurance FAQ 2026 | DP3 Coverage & Cost Explained

If you’re looking for clear answers about Texas landlord insurance, this Landlord Insurance Texas FAQ will help you understand DP3 coverage, cost, liability, water damage limits, and new 2026 rules for rental properties. These are the most common questions Texas landlords ask before buying or updating their policy.

1. What is landlord insurance?

Landlord insurance is a policy designed for homes that are rented out to tenants. It covers the structure of the property, liability if someone gets hurt, loss of rental income, and damage caused by fire, storms, or tenants. It replaces a homeowners HO3 policy when the owner does not live in the home.

2. What is the difference between landlord insurance and homeowners insurance?

Homeowners insurance (HO3) covers owner-occupied homes, while landlord insurance (DP3) covers tenant-occupied properties. DP3 includes loss of rent, landlord liability, and protection for tenant-caused damage—features that HO3 does not provide. Using HO3 for a rental can lead to claim denial.

3. Do I need a DP3 policy for a rental property?

Yes. A DP3 policy is the correct insurance for single-family rentals, duplexes, and investment properties. It protects against fire, storm damage, tenant-caused damage, water leaks, and loss of rental income. Most lenders and property managers require DP3 instead of HO3 for rentals.

4. How does landlord insurance work in Texas?

Landlord insurance in Texas protects the rental property structure, covers landlord liability, replaces lost rental income after a covered event, and pays for repairs caused by storms, hail, fire, or tenant-related damage. Texas carriers evaluate roof age, plumbing systems, and tenant type to determine eligibility and pricing.

5. Is landlord insurance mandatory in Texas?

Landlord insurance is not required by Texas law, but most mortgage lenders, property managers, and leasing agreements require it. Without a DP3 policy, landlords risk paying out-of-pocket for structural damage, liability claims, and lost rent if the home becomes unlivable.

6. Does landlord insurance cover tenant-caused damage?

Yes. A DP3 landlord policy typically covers accidental tenant-caused damage, such as kitchen fires, water heater leaks, broken windows, or vandalism. However, intentional damage, neglect, or long-term unrepaired leaks are often excluded. Requiring tenants to carry renters insurance adds additional protection.

7. What does DP3 insurance cover?

DP3 covers the dwelling structure, landlord liability, loss of rental income, water damage from sudden leaks, storm and hail damage, other structures like fences, and accidental tenant-caused damage. It is the broadest form of insurance for rental properties and offers Replacement Cost coverage when eligible.

8. How much does landlord insurance cost in 2026?

In Texas, landlord insurance typically costs between $1,700 and $3,000 per year for single-family rentals. Factors include roof age, home condition, location, claim history, and whether the home is long-term or short-term rental. Airbnb properties and older homes usually cost more due to higher risk.

9. Is landlord insurance more expensive than home insurance?

Yes. Landlord insurance usually costs 15–25% more than homeowners insurance because tenant-occupied homes carry higher risk. Landlords face more water damage, liability exposure, and loss-of-rent situations, which increases the insurer’s potential payout.

10. What affects the price of landlord insurance in Texas?

Pricing is influenced by roof age, plumbing type, year built, location, prior claims, rental type (long-term vs Airbnb), security features, and the chosen deductible. Homes with roofs older than 15–20 years often receive ACV roof coverage, which also affects cost and eligibility.

11. What is loss of rental income coverage?

Loss of rental income (LOR) pays the landlord when a covered claim—such as fire, water damage, or storm repairs—makes the home unlivable. It reimburses lost rent during repair periods, typically up to 12 months. HO3 policies do not include this coverage.

12. Does landlord insurance cover water leaks or water damage?

DP3 policies usually cover sudden and accidental water damage, such as burst pipes, water heater failures, or appliance leaks. However, many Texas carriers apply a $10,000 water limit unless full coverage is purchased. Slow leaks, seepage, and long-term moisture damage are commonly excluded.

Need a customized quote for your rental property? Visit our service page DP3 rental property insurance in Texas.

For a full explanation of DP3 coverage, cost, and 2026 changes, read our complete Landlord Insurance Texas Guide.

For more official guidelines, check the Texas Department of Insurance – Landlord Insurance.