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Renting a house or apartment in Texas is a dream for many people because it's a beautiful state and has many opportunities. Whether it's foodies in Houston, artists in Dallas, or college students in Austin, they all flock here.
As a landlord, you have many potential tenants to consider, which is great for your bottom line. However, you also know how important it is to have landlord's insurance. Did you know it won't cover a renter's personal property? Instead, they would need to have renters insurance.
The Texas Department of Insurance has a great explanation of renters insurance and its purpose.
Today, you'll learn all about Texas renters insurance. What is it, what does it do, how does it work, and how will you, as the landlord, benefit? Let's dive in!
What Is Texas Renters Insurance?
There are so many things that might go wrong with a rental property, including damages and injuries. Luckily, you have a way to protect yourself from liability with renters insurance!
Texas renters insurance covers damage to the unit and other people's belongings. Likewise, it will offer personal property coverage, liability coverage, and more. Typically, the protection is broad and helps tenants in various situations.
However, tenants should know what renters insurance covers before they invest. Though you might put it in the lease as a requirement, you want them to be fully protected.
Average Cost of Renters Insurance in Texas Per Year
The average cost of renters insurance in Texas runs about $14 per month or $173 per year. However, the national average is only $148/year, which is a 17 percent price gap.
Typically, renters insurance companies in Texas will use the tenant's credit-based insurance score to set rates. This is similar to the traditional credit score. Overall, it means that tenants with poor credit or no rental history may find it more expensive to get coverage.
How Much Does Texas Renters Insurance Cost (Based on Popular Cities)?
Renters insurance rates are dependent on how much stuff the tenant has and where they live. For example, Houston is much higher than Dallas.
Here are the prices tenants might pay for renters insurance based on the city, according to Lemonade:
- San Antonio - $21
- Houston - $18
- Fort Worth - $20
- El Paso - $19
- Dallas - $16
- Austin - $16
- Arlington - $20
Is Renters Insurance Required in Texas?
Do tenants need renters insurance in Texas? It's always wise for them to get it, but the law doesn't require it. However, landlords often mandate it in their leases, which protects everyone from damages and liability.
Most tenants are grateful to their landlords after a covered event because they realize how much it helps!
Overall, you can require renters insurance in the lease, and you should also have a clause in the agreement for proof of the policy before signing or moving in. It's wise for you to ensure the tenant has enough personal liability and personal property coverage. Ask them to list you as an interested party, which notifies you of changes or cancellations.
What Does Renters Insurance Cover in Texas?
Natural disasters happen frequently in Texas, which include tropical storms and tornadoes. Though landlord's insurance will cover the structures, it won't reimburse the tenant for their possessions. In some cases, renters insurance won't automatically provide protection for these circumstances:
- Flooding - The Texas Department of State Health Services claims that flooding is a common disaster in the state. However, standard policies won't cover it. Therefore, tenants might need separate flood insurance.
- Tornadoes, Tropical Storms, and Hurricanes - Most renters policies cover wind-related damages, but the coverage could exclude hurricanes, tropical storms, and tornadoes, especially in high-risk areas. Remind tenants that over 100 tornadoes strike Texas each year (average).
- Wildfires - Texas is also prone to wildfires. Many renters insurance policies will cover fire loss, but tenants need enough personal property coverage to replace their personal belongings if it happens.
Let's now turn our focus to what renters insurance covers:
Personal Property Coverage
Personal property coverage protects the tenant's stuff, regardless of where they are at the time the damage occurs. This includes ruined couches because of burst pipes and stolen iPads while in Costa Rica.
Liability Protection
Suppose the tenant has friends over for a party, and someone fell and sprained their ankle. They could be liable for the medical expenses. If a guest is hurt on the property or anyone within the policy damages another party's stuff, the insurer will cover it.
Medical Payments Coverage
Similar to liability protection, medical payments protection will cover emergency room visits and other medical expenses if someone is hurt while at the tenant's home. Likewise, it covers accidents the tenant causes to other people on the property. However, it doesn't cover the residents of the apartment or house.
Loss of Use
If a tenant can't stay in their home because of a windstorm or fire, loss of use coverage kicks in. This provides reimbursements for additional living expenses, such as a temporary place to live, laundry, food, and more.
What Does Renters Insurance in Texas NOT Cover?
Knowing what renters insurance in Texas covers is invaluable, but it's also helpful to understand that it doesn't protect against everything. Here's what it won't cover:
- Unscheduled Values - Valuable items, such as electronics, jewelry, or artwork, might not be covered under a traditional rental insurance policy. Often, tenants need to schedule them separately, which costs extra.
- Damages from Non-covered Events - Some events simply aren't covered by renters insurance, such as floods and high-wind situations.
- Damages Over the Policy Limit - Coverage limits will determine how much a policy pays. If a tenant has $15,000 worth of coverage, but the cost to replace everything is $16,000, they'll have to pay $1,000 out of pocket.
How to Choose the Right Renters Insurance Policy After Getting a Renters Insurance Quote
With so many companies out there, it's important to make sure the tenant knows how to select the best one. Here are a few tips:
- Get More than One Renters Insurance Quote - Multiple quotes will help tenants compare prices and get the best deal and coverage.
- Appropriate Amount of Coverage - Tenants need to get enough renters insurance coverage for personal property and liability. Average renters have $35,000 worth of stuff, but that varies between people. It's best for tenants to list everything they own, noting the prices they would pay for those items now. Add it all up to see what it might cost.
- Higher Deductibles - The deductible is what a person pays before the insurance company starts paying out. A higher deductible can mean a lower premium each month, but it might also indicate that the tenant pays more before the insurer takes over.
Available Renters Insurance Discounts in Texas
It's possible to lower renters insurance rates by using the discounts available. Each company is different, but here are the common renters insurance discounts tenants might encounter:
- Bundling renters and auto insurance together
- Claims-free discount
- Protective devices discount
- Loyalty discounts
- Generational discounts
- Paperless billing and full pay discounts
- Autopay discounts
- Smart home discount
- Early shopper discount (buying before the policy ends)
How Does a Renters Insurance Policy Protect the Landlord or Property Manager?
You have a responsibility to your tenants to make sure everything is safe for use. However, accidents and natural disasters happen. Why is Texas renters insurance beneficial to you? Here are the reasons to require it:
- Offers relocation expense assistance so that you're not required to pay to house a tenant until you can make repairs
- Reduces your risk of lawsuit if someone is hurt because the tenant was careless
- Protects you from personal property damage disputes
- Helps you be a pet-friendly landlord
- Can lower your landlord's insurance premiums
Top 5 Best Renters Insurance Companies in Texas
Learning about the best renters insurance companies will help you explain the options available to tenants. They can read this section, or you can verbally tell them. Let's get started!
1. Lemonade Renters Insurance
College students and first-time renters might want to consider Lemonade for renters insurance coverage. It has an easy sign-up process! Tenants can register for a policy with the fast online tool, and the AI-enabled app will help them file a claim if needed.
Though Lemonade is a newer company, which means less experience, it does offer a few discounts automatically. Plus, the quote process is easy, fast, and transparent. Likewise, tenants can adjust their additional living expenses, personal property, and liability coverages as needed.
Tenants will also find additional coverage options, such as water backup damage, protection for a significant other, valuable items (bikes, art, jewelry, and collectibles), and landlord property damage.
2. State Farm Renters Insurance
When tenants want renters insurance coverage, they might think of State Farm. It has inexpensive premiums on standard coverage for medical payments, liability, and property. Plus, it's easy to get quotes because of the automated tool.
However, the low-cost choice typically only covers the bare minimum. The additional coverage options include business property, high-value items, and identity theft protection. However, these are more expensive than the competition, so it's pricey if tenants want comprehensive coverage.
Still, there are many renters insurance discounts available, such as bundling and home alert features that can help tenants save money.
3. Nationwide Renters Insurance
Getting renters insurance policies from Nationwide is a smart choice for people who want to customize them to their needs. This company has many endorsements and add-ons. However, the prices are higher, especially when extra coverage is included. Still, it might be worthwhile if your tenants have unique requirements.
4. Allstate Renters Insurance
Allstate has solid coverage, customer service, discounts, and add-ons. In fact, the web chat feature is very easy to use, so it will be effortless for tenants to file claims. Likewise, customer service is available 24/7.
However, Allstate requires Social Security numbers in some states before issuing renters insurance policies. Likewise, the automatic quote tool might not be available in Texas. Tenants might have to call to get an estimate.
The additional coverage options include higher limits for any scheduled property, extended coverage for watches, furs, and jewelry, and more.
5. Toggle Renters Insurance
Toggle is a great choice for renters insurance in Texas because it's a tech-forward provider. Those who wish to build their credit will love it. Tenants know that monthly rent payments aren't reported to the credit bureaus, but Toggle has a unique Credit Lift feature to report them and get credit.
Those who want a customizable option might like Toggle. It has many add-on coverages. You can get endorsements for side hustles, high-value items, being a pet parent, temporary living expenses, and identity protection.
However, rates can be higher than the competition, and it's often hard to get a customer service representative on the phone.
What Is DoorLoop?
You now know why Texas renters insurance coverage is crucial for your tenants, but how do you keep track of their policies? Unless you have one home you rent out, you'll probably have multiple people to watch and stay organized.
DoorLoop is an excellent property management software! It's designed for landlords of any size and helps them manage their mixed-use portfolios or simple commercial/residential properties. Here are the benefits of using this organizational tool:
- Manage online maintenance requests and reduce the need for tenants to call or text.
- Manage your accounting tasks.
- Manage your rental portfolio, regardless of its size.
- Allow tenants to apply and pay online through the tenant portal.
- Collect rent automatically.
- Receive your free website to market your vacancies and customize it to meet your needs.
Are you ready to see how DoorLoop can help you? Schedule your demo today or learn more about the software!
Why Work with DoorLoop
Understanding the benefits of Texas renters insurance is the first step. Now, you must decide if you want to mandate it in your lease.
With DoorLoop, it's easy to require tenants to get renters insurance in Texas. They can submit their preferred company online! However, it's possible for them to apply directly in the tenant portal or on the application. It's powered by Lemonade/SURE, depending on the state the property is in.
Check out DoorLoop and how it can help you require renters insurance today!
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