Landlord Insurance in Dallas: What You Should Know

Dallas is one of the fastest-growing cities in the county, but it’s also in the direct path of some of the worst weather. Texas leads the U.S. in billion-dollar weather and climate disasters, making up about 15% of all such events since 1980. The state regularly ranks among the highest for hail-related claim costs, and in 2024, it recorded more hailstorms than any other state. From tornadoes to droughts and freezes to floods, there’s no shortage of unpredictable events. 

Each of these hazards can cause major damage that’s expensive to repair and can interrupt rental income for weeks or even months. Without the right coverage in place, landlords could be left paying out of pocket for everything from legal fees to new roofs and sheds. That’s why it’s essential to understand how landlord insurance in Dallas works. This guide will explore landlord insurance vs. homeowners insurance, what each policy covers, how to choose the right plan, and the steps to take to file a claim. By staying proactive, you can protect your investment and create a safe place for your tenants to live. 

What Is Landlord Insurance?

Landlord insurance in Dallas is a special type of property insurance for homes, duplexes, or apartment buildings that you rent out but don’t live in yourself. Because a rental property is considered a business, not your personal home, the coverage is designed differently than a standard homeowners policy. 

Most Dallas landlord insurance policies provide protection for three areas: 

1. Dwelling coverage: Pays to repair or rebuild your property after a covered event like hail, fire, wind, or certain kinds of water damage.

2. Liability coverage: Helps cover medical bills, legal costs, and settlements if someone is injured on your property and you’re found responsible.

3. Loss of rental income coverage: Replaces the rent you lose if your property can’t be lived in after a covered claim.

Not every event will be covered if you have landlord insurance in Dallas. Many policies have specific exclusions, meaning if you submit a claim for one of these events, it’ll result in a denial. The most common policy exclusions include: 

• Flood or earthquake damage
• Mold removal
• Normal wear and tear
• Eviction costs
• Damage caused intentionally by tenants
• Pest infestations like termites or rodents 
• Preventative maintenance
• Tenant belongings

For some landlords, these exclusions can make a policy far less useful unless additional protection is added. That’s why Dallas landlord insurance can be customized with endorsements, which are optional add-ons that expand coverage to meet your specific needs. Popular endorsements include:

• Landlord belonging protection: Covers items you own that are kept at the property for tenant use, such as appliances, furniture, lawn equipment, or other tools

• Flood coverage: Provides protection against water damage from flooding caused by heavy rain, flash floods, or overflowing rivers

• Vacancy protection: Keeps your policy active if the property is empty for longer than 30-90 days allowed under most policies

• Law upgrades: Pays for the extra cost of bringing a damaged property up to current building codes after repairs, which can be useful for older Dallas homes

• Equipment breakdown coverage: Covers sudden mechanical or electrical failures of systems like HVAC units, water heaters, or built-in appliances, which can be costly to replace unexpectedly. 

• Sewer backup coverage: Pays for cleanup and repairs if water or sewage backs up into the property from a clogged line or full drainage system, which can be a risk during Dallas’s heavy rainstorms. 

While Texas law does not require landlords to carry insurance, most mortgage lenders do. Even if you own your property already, skipping coverage leaves you vulnerable to expensive repairs, legal claims, and lost rent after a disaster. If anything, it’s worth your peace of mind to know that you’re protected if something bad happens. 

Landlord Insurance vs. Homeowners Insurance

If you own your home, you may assume that your homeowners policy will also cover your rental. However, there are differences between landlord insurance vs. homeowners insurance, and treating them the same can get you in legal and financial trouble. Here’s what separates the two: 

• Homeowners insurance covers the home you live in. It’ll protect your personal belongings, provide liability coverage for guests, and pay for your living expenses if you have to move out during repairs. 

• Landlord insurance is for rental properties only. It focuses on the building itself, your liability as a landlord, and lost rental income, but not your personal belongings. 

Another major difference between landlord insurance vs. homeowners insurance is the cost. Since rental properties are riskier to insure because of tenant damage, higher turnover, and longer vacancies, Dallas landlord insurance is usually 25% more expensive than homeowners coverage. Before you rent out a property, make sure you have the right protection. 

Different Types of Rental Property Coverage

When you start comparing landlord insurance policies, you’ll notice that they’re all different, both in terms of what’s covered and how much they cost. Insurers typically offer three types of policies (DP1, DP2, and DP3), which are known as dwelling policies. Understanding their differences before you commit is essential, because once you’re in the middle of a claim, it’s too late to wish you’d picked more comprehensive coverage. 

DP1 Policies

DP1 policies (Dwelling Fire Form 1) are generally the most affordable of the three, but offer the least protection. They’re known as “named peril” plans because they only cover specific events listed in the policy, such as lightning, hail, wind, and fire. Anything not named is automatically excluded. 

Claims are paid based on the actual cash value (ACV) of the damaged property, which means the insurance company subtracts money for age and wear before issuing your check. Sometimes, this will leave you with much less than you need to actually repair or replace the damaged parts. This is why DP1 policies tend to be best for older, lower-value rentals that don’t need much protection, or in situations where you can afford to cover more costs out of pocket. 

DP2 Policies

A DP2 policy (Broad Form) expands the list of problems that are covered. This type of landlord insurance in Dallas may include things like burst pipes, falling tree limbs, or certain types of structural collapse in addition to the basics. Even more important, DP2 pays you based on replacement cost, not actual cash value. This means you’ll get the full amount it costs to replace the damaged part of your property with a new one of similar quality, without deductions for age or condition. For many Dallas landlords, a DP2 policy is a solid middle ground between price and protection.

DP3 Policies

DP3 (Special Form) policies work in the opposite way from DP1 and DP2. Instead of listing only what’s covered, it assumes everything is covered unless it’s specifically excluded (like floods or earthquakes). Like DP2, it also pays at replacement cost, giving you enough money to fully replace damaged items with new ones. This is the most expensive type of policy, but it’s also the most comprehensive. DP3 is often the best choice for higher-value properties, historic homes, or rentals in storm-prone areas of Dallas where you want the biggest safety net possible.

Umbrella Insurance

Even if you buy a DP3 landlord insurance in Dallas, there will still be a limit to how much your insurer will pay for a claim. If you’re sued and the settlement or court judgment is larger than your policy’s liability limit, you’d have to pay the difference out of your own pocket. With umbrella insurance, you’ll get extra liability protection that kicks in when your regular policy runs out. The best part is that umbrella policies are usually very affordable, costing just $383/year for $1 million in additional protection on average. 

Limited Liability Company (LLC)

If you’re looking for another way to protect yourself as a landlord, consider putting your rental business into a Limited Liability Company (LLC). An LLC is a legal business structure that separates your personal assets (like your home, car, boat, etc.) from your rental property. If someone sues you over something that happens at your rental, they’re suing the LLC, not you personally. 

This means that even if a claim goes over your insurance coverage, your personal bank accounts and property are protected. Only the assets owned by the LLC, like the rental itself, would be at risk. For the strongest coverage, most property owners purchase a comprehensive Dallas landlord insurance policy and apply for an LLC. 

Landlord Insurance Costs in Dallas: What to Expect

In Dallas, landlord insurance costs have been climbing, and not just because of inflation. Severe weather events, rising property taxes, and the growing price of building materials and labor needed to repair damage are all playing a part. Since insurers are paying out more claims than in many other markets, they’ve begun raising premiums accordingly.

Landlord insurance costs in Texas average more than $1,800 a year for a property worth around $200,000, but that figure is a statewide number. It includes small towns and rural areas with lower housing costs and lower risk, so the true cost in a major area like Dallas is often significantly higher. Other factors that can influence the price include:

• Age and condition of the property: Older properties with outdated roofs, wiring, or plumbing tend to have higher rates.

• Property value and size: Higher-value or larger homes cost more to repair or rebuild, which raises premiums. For example, a small apartment will often cost less to insure than a multi-family home. 

• Location: Properties in flood zones, high-crime areas, or hail-prone neighborhoods are usually more expensive to insure.  

• Coverage limits and endorsements: Add-ons that provide coverage for landlord belongings, flooding, or equipment breakdown will increase your annual cost. 

• Claims history: A record of frequent claims can make insurers view you as higher risk, raising your premium. 

• Policy type: If you choose a DP3 plan, it’ll cost more than a less comprehensive policy, like DP1. 

Landlord insurance costs might seem expensive, but remember that these policies serve an important purpose. At the end of the day, going without a policy is likely to cost you much more than an annual payment.

How to File a Dallas Landlord Insurance Claim

Filing a claim under your Dallas landlord insurance policy doesn’t have to be stressful, but it does require you to act quickly and be thorough. The faster and more organized you are, the smoother the process tends to be. 

Step 1: Document the damage

As soon as it’s safe to do so, take pictures and videos of the damage, both up close and from further away. Be as detailed as possible, and ensure the pictures have timestamps. 

Step 2: Prevent more damage 

Insurance companies expect you to take reasonable steps to keep the damage from getting worse. Whether you need to turn the water off or tarp the roof, it’s okay to make minor repairs to avoid additional harm. 

Step 3: Contact your insurance company

Report the claim to your insurer as soon as you can. After a major storm, adjusters can be booked out for weeks, so getting your claim in early can speed up the process. 

Step 4: Submit all required documents

Your insurer may ask for estimates from contractors, copies of repair receipts or invoices, or official reports from the police or fire department. Provide these as requested to keep the process moving. 

Step 5: Meet the adjuster on-site

When the insurance adjuster visits your property, walk with them and point out any and all damage. Sometimes minor issues can worsen, so be sure to have everything documented. 

Step 6: Keep records until the claim is settled  

Keep all claim-related emails, letters, receipts, and notes. These records can help if there’s a dispute or you need to appeal the decision. 

State law requires insurance companies to acknowledge your claim within 15 business days. From there, they can request more information and do their investigation. After they have everything they need from you, they have 15 more days to approve or deny the claim, unless they tell you they need more time in writing. Once your claim is approved, you must be paid within five business days. 

The Takeaway: Why Dallas Landlord Insurance Matters More Than Ever

Owning rental property in Dallas can be rewarding, but it also comes with challenges that few other markets face. Between the city's growth and its susceptibility to severe weather events, landlords here have to think about more than just collecting rent. The right Dallas landlord insurance policy helps ensure that your business can stay afloat through each tornado, hailstorm, and summer of intense heat. 

Knowing the difference between landlord insurance vs. homeowners insurance, choosing the right plan, and adding endorsements that fit your property’s needs can make all the difference. Just as important is knowing how to handle the claims process when you need it. 

If you haven’t reviewed your coverage lately, consider adding a fresh pair of eyes by partnering with a property manager like Evernest. We work on behalf of landlords like you to ensure that every part of your business is safe and profitable. Reach out today for assistance with everything from tenant placement to maintenance to landlord insurance in Dallas.