Texas landlord insurance glossary

Short answer. A Texas landlord policy is usually a dwelling policy, often a DP-3: it covers the house, may cover rent you lose after a covered loss, and may or may not include liability. Below are the terms on a Texas rental policy and its declarations page, A to Z, in plain words, most linked to the guide that covers them.

Two cautions apply to every entry. Definitions describe how terms are usually used; your own policy's declarations page and the forms attached to it decide what it covers. And where we quote the Texas Department of Insurance's (TDI's) standard dwelling form, the TDP-3 (last revised in 2002), we do so because it is public: insurers may still use it, but many now use their own approved forms, and surplus-lines insurers use theirs.

A

Actual cash value (ACV)

A way of settling a claim that takes depreciation off first. TDI defines it as "replacement cost minus depreciation" (TDI Home insurance guide), so on an older roof or house the same damage pays less. See Roof ACV vs replacement cost in Texas.

Additional insured

A person or company the policy also protects, usually against liability claims, in the way the endorsement that adds it describes, such as a property manager. It is not the same as being the named insured: a co-owner on the deed should normally be a named insured instead. What an additional insured gets depends on that endorsement, so ask rather than assume. See LLC rental property insurance in Texas.

Additional interest

Someone the policy records because it has a stake in the house, so that it is told about changes or cancellation. It is not protected by the policy. A lender that should be paid on a building claim belongs in the mortgagee slot instead. See LLC rental property insurance in Texas.

Additional living expense (ALE)

A homeowners coverage that pays "rent, food, and other costs you wouldn't have if you were still in your home" while a covered loss is repaired (TDI). On a rental, the loss that matters is usually the rent you stop receiving: see fair rental value.

Adjuster

The person the insurance company sends or assigns to look at the damage and estimate what the policy pays. TDI: "The adjuster works for the insurance company paying the claim" (TDI, Working with an insurance adjuster). A public adjuster is different: someone you hire, for a fee. See Texas storm and hail claims on a rental.

Admitted insurer

An insurance company licensed by TDI to do business in Texas, also called an authorized or Texas-licensed insurer. Its opposite on a landlord quote is a surplus-lines insurer.

All other perils (AOP) deductible

The deductible for most kinds of claims, such as a burst pipe or theft, as opposed to wind and hail. TDI notes a home policy "might have separate deductibles for damage from wind and hail … and 'other perils' like fire and theft" (TDI, declarations page). On the TDP-3, no deductible applies to fire or lightning (TDP-3).

Appraisal

A process in many policies for settling a disagreement about how much a claim is worth. TDI: "It isn't for disputes about whether your policy covers a loss." Each side hires an appraiser, and an umpire (a third appraiser) decides if they differ (TDI).

Assignment of benefits

A document that hands your claim, its payment or your rights under the policy to someone else, often a contractor after a storm. Don't sign one until you understand what you are giving up, and ask an attorney if you're unsure. See Texas storm and hail claims on a rental.

C

Cancellation

Ending a policy before its end date. TDI: "A company must give you 10 days' notice before it cancels your policy. You also have the right to cancel your policy early" (TDI). That page is written for home policies; notice rules differ for surplus-lines policies and larger rentals. On a house or duplex, a Texas-licensed insurer may cancel a landlord (dwelling) policy without one of the reasons the law otherwise requires while the policy has been in effect less than 90 days; a homeowners policy, only while it has been in effect less than 60 days and for narrower reasons (Ins. Code §551.104(g)). See Insurance not renewed or cancelled in Texas?, and pro rata refund.

Claim

Your request to the insurance company to pay for a covered loss. You file it directly with the insurance company named on your policy, using its claims contact. An agency such as AIV Insurance does not handle or decide claims. See Texas storm and hail claims on a rental.

CLUE report

A report of the claims filed on a house or car in the past seven years, even from before you owned it. TDI says insurance companies use it to decide what you pay, and that you can get a free copy of your report each year (TDI, CLUE). How to get it, and how Texas limits its use: Insurance not renewed or cancelled in Texas?

Coverage letters (Coverage A, B, C, D…)

Labels for the parts of a policy. They are not the same on every form: on many dwelling policies Coverage B is other structures, but on the TDP-3 it is personal property (TDP-3). Compare two policies by coverage name, not by letter.

D

Declarations page

The summary page of a policy. TDI: "The first page of your policy is the declarations page. It has a summary of your policy, including your coverages, dollar limits, and deductibles" (TDI). For a policy from a Texas-licensed insurer, the declarations page must state "the exact dollar amount of each deductible" (Ins. Code §2301.056). It came with your policy; look in your email or your insurance company's online account, or ask your agent. See How to read a Texas rental declarations page.

Deductible

The part of a covered claim you pay yourself. "A deductible is the amount of a claim that you must pay yourself," and on home policies "the deductible will be applied to each claim" (TDI Home insurance guide; TDI, deductibles). Rental policies in Texas often have two: see all other perils and wind and hail.

Depreciation

"A decrease in value because of wear and age" (TDI). It is what separates actual cash value from replacement cost.

DP-1, DP-2, DP-3

The three standard dwelling policy forms. A DP-1 covers a short list of named causes of loss, a DP-2 a longer list, and a DP-3 covers the house against any cause of loss not excluded. TDI's own versions are the TDP-1, TDP-2 and TDP-3. Compare two quotes form to form before price to price; see Texas landlord insurance: what a DP-3 covers.

Dwelling (Coverage A on most forms)

The limit for rebuilding the house itself. On the TDP-3 it covers "the dwelling … used principally for dwelling purposes, including structures attached to the dwelling" (TDP-3). It should reflect what rebuilding would cost, not the sale price, and land is not part of it.

Dwelling policy

A property policy written for a house, commonly used for a house someone else lives in; what people often call a landlord policy. It differs from a homeowners policy, which is written for the home you live in. See Homeowners vs landlord insurance in Texas.

E

Endorsement

A form attached to a policy that adds, removes or changes coverage. TDI calls them "endorsements, or policy add-ons" (TDI). The declarations page lists the form numbers attached; those forms carry the wording that decides a claim.

Equipment breakdown

An endorsement some insurance companies offer for the sudden breakdown of equipment, such as an air-conditioning compressor that burns out. The TDP-3 does not cover "loss to machinery, appliances and mechanical devices caused by mechanical breakdown" (TDP-3), so ask whether a policy offers it. See Short-term rental insurance gaps in Texas.

Escrow

An account your lender uses to pay your insurance for you. "The lender holds the part of the payment that is for insurance in an escrow account. Then, when the bill for the insurance is due, the lender pays it from the escrow account" (CFPB). See Texas rental insurance: mortgage and escrow.

Exclusion

A cause of loss, or kind of property, that a policy says it does not cover. Flood, earth movement, wear and tear and, on dwelling forms, most theft are common examples. An exclusion can sometimes be bought back with an endorsement.

Extended replacement cost

An endorsement that adds a cushion above the dwelling limit (the amount the house itself is insured for) if rebuilding costs more than expected. TDI lists "extra construction costs if your policy doesn't pay enough to rebuild your home" among common endorsements (TDI).

F

FAIR Plan (Texas FAIR Plan Association)

The state's insurer of last resort for homes. TDI: "You can get FAIR Plan coverage if you can't find a Texas-licensed company to insure you and at least two companies have turned you down" (TDI). It is generally not a fix for a long vacancy; see Vacant rental property insurance in Texas.

Fair rental value (loss of rent)

Coverage for the rent you lose while a covered loss makes the rental unfit to live in. The TDP-3 describes it as "the fair rental value of that part of the dwelling on the described location usually rented to others by you, less any expenses that do not continue" (TDP-3). It does not pay for a tenant who stops paying. See Loss of rent coverage for Texas landlords.

Flood insurance

A separate policy for flood damage. "Most home policies don't cover damage caused by floods," and "most flood policies have a 30-day waiting period" (TDI). It is available from the National Flood Insurance Program (NFIP) and some private insurers. See Water damage and flood on a Texas rental.

Force-placed (lender-placed) insurance

A policy your lender buys when it has no proof your own coverage is in force, or your coverage doesn't meet what the loan requires, and charges to you. The Consumer Financial Protection Bureau (CFPB): it "is usually more expensive than finding an insurance policy yourself," and "in many instances, this insurance protects only the lender, not you" (CFPB). See Force-placed insurance on a Texas rental.

H

HO-3 and HO-B (homeowners forms)

Homeowners policies for the home you live in. The Texas HO-B form and the national HO-3 are the same type: all risks on the building unless excluded, and named perils for your belongings. Many insurers now use their own forms of that type. TDI explains the difference between the two kinds of cover in All risk or named peril?; see also named perils and open perils. Once a tenant moves in, a dwelling policy is usually the better fit.

I

Insurance agent and agency

A person or firm licensed by TDI to sell insurance. An agent helps you compare and buy a policy from an insurance company. For the duties and penalties in Texas insurance law, an agent who sells a company's policy counts as that company's agent (Ins. Code §4001.051). The insurance company issues the policy and decides and pays claims. AIV Insurance is an agency, not an insurance company.

Insurance to value (the 80% condition)

A condition in many policies that full replacement-cost settlement depends on the dwelling limit being high enough. On the TDP-3 it must be at least 80% of the full replacement cost at the time of loss; below that, the policy pays a proportionate share, or actual cash value if that is more (TDP-3). TDI notes "most companies require you to insure your house for at least 80% of its replacement cost" (TDI).

ISAOA/ATIMA

Short for "its successors and/or assigns, as their interests may appear." It follows the lender's name in the mortgagee line, so the lender stays covered if the loan is sold.

L

Liability (premises liability)

Coverage for a claim that you are legally responsible for someone's injury, or for damage to their property, at the rental. It may pay the cost of defending the claim as well as covered damages. It is not on every landlord policy: the TDP-3 has no liability section at all. See Landlord liability insurance in Texas.

Limit

The most a policy pays for a coverage. The limit and the deductible are separate: where a deductible applies, it is taken off each covered loss, and the limit caps what is paid; see deductible.

Loss of use

On the TDP-3, one extension that covers both additional living expense and fair rental value. Its limit is "20% of the Coverage A (Dwelling) limit of liability," and a payment under it reduces what is left for the dwelling (TDP-3). Many other forms list fair rental value as a coverage of its own.

M

Medical payments

Coverage for relatively small medical bills of people hurt at the property, without anyone first having to prove fault. TDI: it "pays the medical bills of people hurt on your property" (TDI). It is not a substitute for liability coverage.

Minimum retained premium

An amount an insurer keeps when a policy is cancelled, also called a minimum earned premium. The Texas pro rata rule still lets a policy include an amount kept "for otherwise unrecoverable expenses incurred in issuing a policy, such as a minimum retained premium" (28 TAC §5.7015(e)), and TDI's order expects it to be in the insurer's rate and rule filings. Surplus-lines policies often state their own minimum earned premium, so read the cancellation terms before you cancel.

Mortgagee and mortgage clause

The mortgagee is your lender, named on the declarations page. The mortgage clause protects the lender's interest: on the TDP-3, covered loss to buildings is paid "to the mortgagee shown on the declarations page as interests appear," and the lender gets notice if the policy is cancelled or not renewed (TDP-3). The lender's name is often followed by ISAOA/ATIMA.

N

Named insured

The person or company the policy is issued to: the "you" in the policy. On the TDP-3, "you" means "the 'named insured' shown in the declarations and the spouse if a resident of the same household" (TDP-3). Co-owners on the deed should normally be named insureds too. If an LLC owns the house, the LLC should be the named insured. If a trust owns it, the trustee usually is, in that capacity; ask how the insurance company shows it. See LLC rental property insurance in Texas.

Named perils and open perils

Two ways a policy says what it covers. TDI: "Named perils policies cover only the events listed in the policy," while all-risk (open perils) policies "cover any event that the policy doesn't specifically exclude" (TDI). The TDP-3 uses both: open perils for the dwelling, named perils for personal property.

Nonrenewal

An insurance company's decision not to continue a policy past its end date. The Insurance Code's notice rules (chapter 551, subchapter C) reach only policies from Texas-licensed insurers, and among those a homeowners policy or a standard fire (dwelling) policy on a one-family home or duplex, not every rental policy (Ins. Code §551.102). For those, the insurer must mail notice at least 60 days before the policy ends, for a policy bought or renewed on or after January 1, 2024 (before that it was 30 days) (Ins. Code §551.105; HB 1900, section 3). Since January 1, 2026, a Texas-licensed insurer must give you a written statement of why it declined, cancelled or did not renew, without your asking (Ins. Code §551.109 and §551.002, as amended by HB 2067); the rule on what that statement must say is older. See Insurance not renewed or cancelled in Texas?.

O

Ordinance or law

An endorsement for the extra cost of meeting today's building code when a covered loss is repaired. TDI lists "extra construction or repair costs to meet local building codes" among common endorsements (TDI).

Other structures

Structures on the property that stand apart from the house, such as a detached garage, shed or fence. The TDP-3 means structures "set apart from the dwelling by clear space," with a limit of 10% of the dwelling limit, in addition to it (TDP-3). An attached garage belongs to the dwelling.

P

Peril

A cause of loss, such as fire, wind or theft. TDI: "Risks and perils are things that could damage your house or property" (TDI).

Personal injury liability

Liability for claims that are not physical injury, such as wrongful eviction, wrongful entry, libel or slander. Premises liability is built around bodily injury and property damage, so these can fall outside it unless personal injury is added. See Landlord liability insurance in Texas.

Personal property

Your own belongings at the rental, such as furniture in a furnished unit or a washer and dryer. On the TDP-3 it means property "owned or used by you or members of your family residing with you," and a refrigerator and stove you own as a landlord count as part of the dwelling (Coverage A) instead (TDP-3). It does not cover your tenant's belongings.

Premium

"The amount you pay for insurance is called a premium" (TDI). On a surplus-lines policy, taxes and fees are added to it, so compare the total.

Pro rata refund

A refund in proportion to the unused days of a cancelled policy. Since September 1, 2026, unearned premium on a Texas residential property policy "must be calculated pro rata," which in effect ends "short rate" refunds that kept more (28 TAC §5.7015). It is due by the 15th business day after the later of the cancellation date and the date the insurer receives notice of the cancellation (Ins. Code §558.002; 28 TAC §5.7015(b)). Chapter 558's definition of insurer names eligible surplus lines insurers (§558.001), so these rules likely apply to surplus-lines policies too, but that is not settled; confirm with the policy or ask us. See How to switch rental insurance in Texas.

Public adjuster

An adjuster you hire, for a fee, to negotiate your claim with the insurance company. Public adjusters are licensed by TDI, their fee may not exceed 10% of the settlement (Ins. Code §4102.104), and TDI says you have 72 hours after signing to cancel the contract (TDI, Public adjusters). You still pay your deductible. See Texas storm and hail claims on a rental.

R

Recoverable depreciation

On a replacement cost claim, the depreciation the insurance company holds back from the first payment and pays once the repair is done. TDI says the company pays "the amount it kept for depreciation after it gets the bill for the finished job" (TDI); some pay as work progresses, so ask your adjuster. On an actual cash value policy it is not paid later. See Roof ACV vs replacement cost in Texas.

Renters insurance

The tenant's own policy for their belongings, their extra living costs after a covered loss, and their personal liability. TDI tells renters: "Your landlord's insurance won't cover your personal items," and "Renters insurance isn't required by law. Some landlords might require you to have a renters policy" (TDI). See Landlord vs renters insurance in Texas.

Replacement cost

A way of settling a claim that "pays to repair or replace your house and personal property at current prices" (TDI). TDI adds that with replacement cost "most companies pay with two checks": the first for the estimated repair cost minus depreciation and the deductible, and the recoverable depreciation after the repair. Full replacement cost may depend on insurance to value.

Roof age schedule

A table in some policies that pays a smaller share of a roof's cost the older the roof is. Ask for the schedule itself: it decides what a roof claim pays. It is a different basis from actual cash value, which TDI warns "some companies will switch to" as roofs age (TDI, Insurance and your roof). See How old can a roof be to insure in Texas?

Roof settlement

How a policy pays for roof damage: at replacement cost, at actual cash value, or by a roof age schedule. Two quotes that look alike can differ here, so check the roof terms on each. See Roof ACV vs replacement cost in Texas.

S

Short-term rental

A home rented to guests by the night or the week. TDI: "Most policies won't pay for damages or injuries that occur during short-term rentals" (TDI), so tell your insurance company or your agent how the house is rented. See Short-term rental insurance in Texas and Short-term rental insurance gaps in Texas.

Stamping fee

A small fee added to a Texas surplus-lines policy, charged through the Surplus Lines Stamping Office of Texas: 0.04% for policies that start on or after January 1, 2024 (SLTX). It is often shown beside the surplus lines tax on the declarations page. See How to read a Texas rental declarations page.

Subrogation

An insurance company's right, after paying a claim, to recover the amount from whoever caused the loss. On the TDP-3 the insurer "may require an assignment of rights of recovery for a loss to the extent that payment is made," and you may waive that right in writing before a loss (TDP-3). See Does Texas landlord insurance cover tenant damage?

Surplus lines

Insurance from a company not licensed in Texas that may write risks Texas-licensed insurers won't. TDI: "Although they don't have a Texas license, they must meet state standards to sell insurance here" (TDI). For a rental dwelling, Texas allows it only when the coverage can't be found "after a diligent effort" from a licensed insurer (Ins. Code §981.004). The policy must say the insurer "is not a member of the property and casualty insurance guaranty association" (§981.101). A 4.85% tax applies when Texas is your home state (Ins. Code §225.004), plus a stamping fee.

T

Theft (limited theft coverage)

Theft is narrow on a dwelling policy. The TDP-3 excludes theft of property that is not "an integral part of any structure" (TDP-3), and some insurance companies offer limited theft coverage for your own belongings as an option. It does not cover your tenant's belongings.

TWIA (Texas Windstorm Insurance Association)

The state's wind and hail insurer for the coast. TDI: "If you live on the Texas coast or in Harris County on Galveston Bay, your home policy might not cover wind and hail damage," and TWIA "sells wind and hail coverage for coastal residents" (TDI). Inland, wind and hail are usually covered by the property policy itself, under its own deductible; see Texas wind and hail deductibles, explained.

U

Umbrella policy

A separate policy that adds liability protection above your other policies. TDI: it "would kick in after your auto or home insurance stops paying" (TDI, Umbrella policies). It usually requires liability on the rental's own policy underneath. A personal umbrella may exclude rentals, or may not reach a house an LLC owns, so ask the umbrella insurer in writing before you rely on one. See LLC rental property insurance in Texas.

Underwriting

How an insurance company decides whether to insure a house and at what price. TDI: "Each company's underwriting rules are different" (TDI).

Unearned premium

The part of a premium paid for days after a policy is cancelled. An insurer must refund it no later than the 15th business day after the cancellation takes effect (Ins. Code §558.002); how that date is counted, and whether it reaches surplus-lines policies, is under pro rata refund.

Unoccupied

Usually, a house with nobody living in it for now, though the furniture may still be there. It is not the same word as vacant: the TDP-3's vacancy clause speaks of a building that is vacant, while its freezing exclusion applies "while the building is unoccupied" unless you took reasonable care to keep the heat on, or to shut off the water and drain the pipes (TDP-3). Forms define the two words differently, or not at all. See Vacant rental property insurance in Texas.

V

Vacancy clause

A condition that limits coverage once a house has been empty for a set time. The TDP-3: "if an insured building is vacant for 60 consecutive days immediately before a loss, we will not be liable for a loss by the perils of fire and lightning or vandalism or malicious mischief" (TDP-3). Other forms set their own period, sometimes shorter, and "vacant" and "unoccupied" can mean different things. See Vacant rental property insurance in Texas.

Vandalism and malicious mischief

Deliberate damage to the property by someone else. A deductible still applies, and on the TDP-3 coverage stops after 60 days of vacancy. Some landlord policies exclude or limit vandalism by a tenant: the Texas FAIR Plan's dwelling policy, for example, does not cover vandalism "caused by you, a roomer, tenant, or any other person regularly staying at the described location … for a period in excess of thirty consecutive days" (TFPA Dwelling Policy). So check the forms list on your own policy. See Does Texas landlord insurance cover tenant damage?

W

Water back-up

An endorsement for water that comes back up through a sewer or drain, or a sump that overflows. TDI lists "backup of sewers or drains" among common endorsements (TDI). It is not flood insurance.

Wear and tear

Gradual deterioration from age and use. It is maintenance, not insurance: TDI lists wear and tear among things most home policies don't cover (TDI).

Wind and hail deductible

A separate deductible for wind and hail damage. In Texas it is often a percentage, and the Texas Office of Public Insurance Counsel (OPIC) explains that a percentage deductible "is based on the percentage of your home or condo's insured value" (OPIC), not on the damage. On a landlord policy that is usually the dwelling limit, so convert the percentage to dollars before you compare two quotes. See Texas wind and hail deductibles, explained.

AIV Insurance is an independent insurance agency in Texas for landlords and rental owners. We are not an insurance company. If a term on your own policy isn't here, or you want to know what it means for your house, reach us through the contact page or at hello@aivinsurance.com.