Landlord Insurance in Houston: What You Should Know

Houston is a city where renting out property can be incredibly profitable, but it’s also a place where a single incident can change everything overnight. Hurricanes, tornadoes, and tropical storms are a fact of life here, and even neighborhoods far from the coast can see major flooding. Beyond that, tenants can damage property, the summer heat can strain HVAC systems, and hailstorms can dent roofs and damage siding. 

This is why relying on a standard homeowners policy isn’t enough. Houston landlord insurance is designed to cover the risks that come with renting out property and earning rental income. In this guide, we’ll walk through exactly what it covers, the difference between landlord insurance vs. homeowners insurance, the policy types available, and how to file a claim here. By the end, you’ll know how to protect your property, your tenants, and your bottom line from the unpredictable challenges Houston can bring. 

What Is Landlord Insurance?

Landlord insurance in Houston is a type of property policy designed for homes, duplexes, or multi-unit buildings that you rent out but don’t occupy yourself. Unlike a homeowners policy, which is meant for an owner-occupied residence, a landlord plan is built to protect your investment as a business asset since it makes you money. A standard Houston landlord insurance policy usually includes three parts:

1. Dwelling coverage: Repairs or rebuilds your rental after a covered event like wind, fire, or lightning

2. Liability coverage: Covers legal costs, medical expenses, and settlements if a tenant or guest is injured and you’re held responsible.

3. Loss of rental income coverage: Replaces lost rent if the property becomes unlivable due to a covered claim.

Like any insurance plan, there are often exclusions. Many policies will not cover natural disasters (earthquakes, floods, etc.), mold removal, vandalism, pest infestations (termites, rodents), tenant belongings, eviction expenses, or damage caused by neglecting basic maintenance and repairs.

Because Houston has one of the highest concentrations of flood and hail-prone properties in the country, many landlords add specific endorsements (optional add-ons to the policy) for extra protection, such as:

• Flood coverage: Protects against water damage from heavy rain, storm surge, or overflowing bayous

• Landlord belongings protection: Pays to replace or repair appliances, tools, or furniture you own and keep at the rental for tenant use.

• Equipment breakdown coverage: Covers sudden mechanical or electrical failures in systems like HVAC units or water heaters.

• Vacancy protection: Keeps your policy active if the property sits empty longer than the standard 30–90 days allowed.

• Code upgrade coverage: Pays the extra cost of bringing your property up to current building codes after covered repairs.

• Sewer and drain backup coverage: Covers repairs and cleanup if heavy rain or clogs cause water or sewage to back up into the property, which can pose sanitation risks for tenants. 

• Crime-related coverage: Helps pay for repairs or replacement if your property is damaged or items are stolen due to burglary, vandalism, or other criminal acts.

While the law doesn’t require landlord insurance in Houston, most mortgage lenders do, and even without a mortgage, going without coverage can be financially devastating after a disaster.

The Difference Between Landlord Insurance vs. Homeowners Insurance

One of the most common misunderstandings among property owners is assuming that a homeowners policy will also cover a rental property. Knowing the distinctions between landlord insurance vs. homeowners insurance is essential to avoiding expensive surprises when you file a claim. 

Homeowners insurance is intended for a residence you live in yourself. It safeguards your personal belongings, provides liability protection for visitors, and can help cover temporary housing costs if you’re forced to move out during repairs.

Landlord insurance in Houston is made specifically for rental units. Its primary focus is on protecting the building structure, offering landlord-specific liability coverage, and replacing lost rental income if the home becomes uninhabitable. It usually doesn’t cover your personal possessions inside the property unless you add an endorsement. 

Since rentals create more risks, like higher tenant turnover and a greater chance of accidental or intentional damage, Houston landlord insurance costs 25% more than a homeowners policy, on average. While that may seem high, the protection it provides can prevent financial losses far greater than the annual premium.

Different Types of Rental Property Coverage

When you shop for Houston landlord insurance, you’ll see that policies generally fall into three categories. These are called Dwelling Fire policies and are labeled DP1, DP2, and DP3. While they’re all forms of insurance, they differ in how much protection they offer and how much you’ll pay. 

DP1 Policies

A DP1, or Dwelling Fire Form 1 policy, is the most limited and usually the least expensive type of landlord insurance in Houston. It only covers specific “named perils,” like fire, wind, hail, or lightning. That means if you have an incident not listed in the policy, the plan won't cover it. DP1 policies also pay claims based on actual cash value (ACV), which means the insurance company subtracts depreciation before issuing a payout. That means you’ll only get reimbursed for what the damaged item is worth now, not what it costs to replace it brand new. DP1 plans can work for older, lower-value rentals, but they leave you more vulnerable to out-of-pocket expenses. 

DP2 Policies

A DP2 policy (Broad Form) offers a wider range of protection. It includes everything in a DP1 plus other hazards, such as burst pipes, falling tree limbs, or certain types of structural collapse. The big difference is that DP2 policies typically pay based on replacement cost rather than actual cash value. That means you’ll receive enough money to repair or replace damaged parts of the property without deductions for age or wear. Many landlords find this option to be both affordable and strong enough to cover most of the risks they face. 

DP3 Policies

You can think of DP3 policies (Special Form) as the opposite of DP1 plans. Instead of listing what is covered, it covers everything unless the policy specifically excludes it. Floods and earthquakes are common exclusions, but otherwise, DP3 policies are the most comprehensive option available. Like DP2, they pay claims at replacement cost. This type of coverage is especially popular for higher-value properties or rentals in storm-prone parts of Houston, where hurricanes, hailstorms, and even tornadoes can cause significant damage.

Umbrella Insurance

While getting a strong Houston landlord insurance policy is a step in the right direction, every policy places a cap on how much it will pay you if something goes wrong. If a lawsuit or settlement exceeds that limit, the rest comes out of your pocket. For many landlords, that’s not something they can afford. This is why umbrella insurance can be helpful. These plans add $1 million or more in extra liability protection, with the average cost of a policy averaging just $383. If you have multiple rentals or high-value units, you’ll especially want to consider adding more coverage. 

Limited Liability Company (LLC)

Some landlords go a step further and form a Limited Liability Company, or (LLC), for their rental business. An LLC separates your personal assets (like your home, savings, and car) from your rental property. That way, if someone sues over something that happens at the rental, your personal finances aren’t directly at risk. Pairing a strong insurance policy with an LLC gives many Houston property owners peace of mind, knowing they’re protected in several ways. 

Landlord Insurance Costs in Houston

Across Texas, landlord insurance costs an average of $1,800 or more per year for a home valued at around $200,000. In Houston, though, it’s common to pay more. Being right on the Gulf Coast means the city gets more than its share of hurricanes and tropical storms, and the flat land and bayous makes flooding a regular concern. On top of that, Texas is hit with dozens of hailstorms each year, which is another big reason why premiums in Houston are often above the state average. That said, the exact price of your Houston landlord insurance will depend on several factors: 

• Location: Properties in Houston’s designated floodplains, like parts of Meyerland or along Buffalo Bayou, tend to have much higher premiums. Homes in neighborhoods with elevated crime rates (like MacGregor, Sharpstown, and Sunnyside) can also see increased costs.

• Age and condition: Many Houston homes, especially in older areas like the Heights or East End, have aging roofs, outdated plumbing, or older wiring, which can raise your risk of damage, thus increasing your premium. 

• Property size and value: Large houses in upscale areas such as River Oaks or West University cost more to rebuild, which pushes insurance rates higher.

• Extra coverage: Adding flood coverage, sewer backup, or other endorsements will raise the price you pay for landlord insurance in Houston. 

• Claims history: Insurers may view your property as high-risk if you’ve filed multiple claims on it, which often leads to higher rates.

While paying for insurance may feel like just another expense, skipping it can be financially devastating. One major storm, flood, or fire could put your entire investment in jeopardy. 

How to File a Landlord Insurance Claim in Houston

Filing a claim under your landlord insurance in Houston isn’t complicated, but it’s important to stay organized and act quickly to avoid delays or denials. Here’s how to handle the process step by step: 

1. Document the damage: As soon as it’s safe, take clear, detailed photos and videos of every affected area. Capture both close-ups and wide shots, and make sure everything is timestamped (most phones and cameras have a built-in feature). 

2. Prevent further damage: Insurance companies expect landlords to take reasonable steps to keep the problem from getting worse. That could mean tarping a roof, shutting off water to stop a leak, or boarding up broken windows until repairs can be made. In many cases, you can be reimbursed for these quick fixes, so make sure to save receipts. 

3. Contact your insurer ASAP: In Houston, major weather events can keep adjusters busy for weeks. Filing your claim early can put you ahead in the queue and speed up the inspection process.

4. Provide all requested forms: Your insurer may ask for repair estimates, receipts, or official reports from the police or fire department. Submitting everything as soon as they’re requested will help move your claim along. 

5. Be there for the adjuster’s inspection: Walk through the property with them, point out all visible damage, and mention any potential hidden issues (like water damage inside walls) so nothing is missed.

6. Keep records: Save every email, letter, and receipt related to the claim until it’s completely resolved. If there’s a dispute later, you’ll have proof of what was said and done.

In Texas, insurers must acknowledge your claim within 15 business days, request any additional information they need, and then approve or deny the claim within 15 more business days after receiving that information. Once approved, they must issue payment within five business days.

Why Landlord Insurance in Houston Is Worth the Investment

Owning rental property in Houston can be a rewarding way to build wealth, but the city doesn’t always make it easy. Between hurricanes, heavy rain, flooding, and even the occasional hailstorm, it only takes one bad day to put your investment at risk. Houston landlord insurance acts as a safety net, helping you repair damage, replace lost rent, and handle liability issues without draining your savings.

With the right coverage, plus a few add-ons for Houston’s unique risks, you can stay prepared for whatever comes your way and keep your rental business running strong. If you want to be sure your investment is fully covered, consider partnering with a local property manager like Evernest. Reach out today!