How to switch rental insurance in Texas

Short answer. You can usually switch a Texas rental property policy before it renews. Put the new policy in force first, then cancel the old one effective the same day the new one starts, so there is no gap. Since September 1, 2026, Texas-licensed insurers must refund the unused premium pro rata, in proportion to the unused days.

Tell your lender if escrow pays. The refund is due by the 15th business day after the cancellation date or the date the insurer gets your request, whichever is later. These rules likely apply to surplus-lines policies too, but that is not settled; confirm with the policy or ask us (see Step 3). A claim for damage that happened under the old policy stays with the old insurance company.

Step 1: Line up the new policy before you cancel anything

The Texas Department of Insurance (TDI) gives the advice in one line: "Never cancel a policy until you get your new policy or a written statement of coverage" (TDI, Shopping tips).

Before you commit, compare the two policies form to form, not price to price. A quote with no liability, a larger wind and hail deductible, or a roof settled at actual cash value is a different product. See Texas landlord insurance: what a DP-3 covers, Texas wind and hail deductibles, explained and Roof ACV vs replacement cost in Texas.

Step 2: Match the dates so there is no gap

Choose one date: the new policy's effective date. Ask the old insurance company to cancel on that same date. Insurers may ask whether you had any days without coverage, so make sure the dates match exactly.

On TDI's standard dwelling form (TDP-3, last revised in 2002; many insurers now use their own approved forms), you "may cancel this policy at any time by notifying us of the date cancellation is to take effect" (TDP-3, Cancellation). Other forms have similar wording. Put the request in writing and keep a copy.

Send the request before the date you want. Whether an insurance company will accept a cancellation date earlier than your request is up to the insurer and the policy, so don't count on choosing a date in the past.

Step 3: Understand the refund

A Texas-licensed residential property insurer must pay a cancellation refund within 15 business days (Ins. Code §558.002), and since September 1, 2026 it must calculate the refund pro rata (28 TAC §5.7015). Surplus-lines insurers are covered below. Two Texas rules work together:

• The deadline. "An insurer shall refund the appropriate portion of any unearned premium to the policyholder not later than the 15th business day after the effective date of cancellation" of a residential property policy (Ins. Code §558.002(d)). Unearned premium is the part you paid for days after the cancellation. The statute's definition of "residential property insurance" includes a "residential fire and allied lines insurance policy" (Ins. Code §2301.051); our reading is that a dwelling policy on a rental house falls within it. The 15-business-day clock starts when the insurer receives your request, or on the cancellation date if that is later (28 TAC §5.7015(b)); that rule does not change the cancellation date itself.
• The amount. "Unearned premium must be calculated pro rata" (28 TAC §5.7015(a)). TDI's order explains that this in effect prohibits a "short rate" provision, which let insurers keep more than the pro rata share.

Two limits on that:

• The rule does not stop an insurer from keeping "an earned amount that is retained for otherwise unrecoverable expenses incurred in issuing a policy, such as a minimum retained premium" (§5.7015(e)). TDI's order says that amount must be in the insurer's rate or rule filing. This is a minimum the insurer keeps whenever a policy is cancelled, also called a minimum earned premium.
• The insurer may apply the refund "as a credit to other premium due on the same policy, unless the policyholder requests otherwise" (§5.7015(c)).

An illustration. Cancel 100 days into a 365-day policy and 265 of the 365 days are unused, so a pro rata refund is 265/365, about 73% of the premium, less any minimum retained premium the policy allows.

Surplus-lines policies. Some Texas landlord policies are written by surplus-lines insurers, which are not licensed (authorized) in Texas. Chapter 558's definition of "insurer" expressly includes "an eligible surplus lines insurer" (§558.001), so the 15-business-day deadline and the pro rata rule likely apply to surplus-lines policies too, but that is not settled: the rule's own text says only "insurers". Surplus-lines policies often state their own minimum earned premium. Confirm with the policy's cancellation section, or ask us, before you cancel.

Step 4: Switching when your lender pays from escrow

Your lender (or the company that services your loan) pays whatever insurance bill it has on file. When you switch:

• decide whether the new policy is paid from escrow or by you;
• if escrow pays, the new policy should bill your lender;
• if you pay it yourself, tell your lender first, before you pay;
• send the new declarations page, usually through the lender's insurance tracking site.

The old policy's refund may go to you or back through your lender, depending on the insurance company and the loan. Details, and what lender-placed insurance is: Texas rental insurance: mortgage and escrow and force-placed insurance.

Open claims and recent claims

An open claim stays with the old insurance company. The TDP-3 says: "This policy applies only to loss which occurs during the policy period" (TDP-3, Conditions). Damage that happened while the old policy was in force is claimed under the old policy, whether or not you have since switched. Keep its declarations page and forms until the claim is closed.

Report damage before you switch. A new policy generally won't cover damage that happened before it started. If you know of storm damage, report it to the current insurance company first.

Answer loss-history questions accurately. A new insurance company will usually ask about prior claims. Under the TDP-3, the policy is void as to you if you intentionally conceal or misrepresent a material fact; other forms have similar conditions. Texas law lets an insurer rely on that only if the fact was material to the risk or contributed to the loss (Ins. Code §705.004).

Switching at renewal instead

Switching on the renewal date avoids a refund altogether, which is often the simplest route. If a Texas-licensed insurer won't renew a homeowners policy, or a dwelling policy on a single-family home or duplex, it must mail notice no later than the 60th day before the policy expires. That applies to 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). If you receive one: Insurance not renewed or cancelled in Texas?

A short checklist

• New policy issued, or a written statement of coverage in hand
• Old policy cancelled in writing, effective the new policy's start date
• Minimum earned or retained premium on the old policy checked
• Lender told who pays, and sent the new declarations page
• Any known damage reported to the old insurance company before the switch

AIV Insurance is an independent insurance agency in Texas. We are not an insurance company. Refunds are paid by your insurance company, and claims are handled by the insurance company named on the policy. If you're weighing a switch, reach us through the contact page and we'll look at both policies with you before you decide.