Do Landlords Need Umbrella Insurance for Rental Property in Texas?

When you are involved in a loss that expands beyond a typical insurance policy, you can find yourself on the hook to pay for the loss on your own. This can lead to legal issues from others, especially for landlords who have multiple assets which could become a target within a legal battle as a means of compensation. An umbrella insurance policy is an important financial tool that helps protect your assets.

Umbrella insurance for rentals is important because landlords have a responsibility to keep tenants safe in the state of Texas. Failure to do so can put you as a property owner at risk of paying to restore the loss out of pocket.

The biggest point that you’ll want to remember is that an umbrella policy is built around protecting from losses involving personal injury claims and other legal issues that you may be held responsible for as the property owner. Without coverage, you could be paying for expensive medical costs, loss of wages, legal expenses, etc. all out of pocket. Freedom Insurance Group is here to help landlords across the Lone Star State.

We’ve been here for property owners since 2005 and understand the importance of umbrella insurance for rental property owners throughout our great state. Let’s break down the type of coverage you need, how to gain protection for less, and how much coverage you’ll need in Texas.

Umbrella Insurance for Rental Property & Landlord Insurance

Comparing umbrella insurance and landlord insurance, you’ll find some similarities, but there are also many differences along the way. Landlord insurance isn’t required by law, nor is an umbrella insurance policy, but both of them can help you avoid financial hurdles that can harm your personal finances, the lives of your tenants, and your investments:

• Landlord insurance covers your rental property, but if there is an incident that surpasses your coverage, an umbrella insurance policy will be there to supplement the coverage and help you restore the loss. Note: you cannot simply purchase umbrella insurance on its own as it’s supplemental coverage, not a standalone policy.
• Neither is required by law, but both are highly recommended to landlords.
• Policy limits exist in part to help keep your insurance affordable as insurance companies are looking to manage their risk. An umbrella policy is a great way to add coverage without paying an exorbitant amount of money on landlord insurance premiums.
• Keep in mind that landlord insurance policies cost more because they generally come with more assumed risk. This means that the threat of a loss is greater further solidifying the need for protection.

There are many different scenarios that can arise, but the important thing to remember is that your umbrella insurance for an investment property will protect against things that you as a landlord will have to restore when they exceed your initial policy.

For example, if someone is injured while visiting your property, even a third party, as the property owner, you can be held liable for paying their medical expenses. Smaller injuries may not be much of a concern, however, more serious medical issues can easily reach higher amounts than your landlord coverage will provide.

Common examples include falling down a staircase, loss due to negligence, injuries in a common area, etc. Your umbrella insurance policy will help protect you personally from legal issues and financial hardships as it can be used to help restore the loss.

Not Covered by Umbrella Insurance

Personal umbrella insurance is great protection for landlords in Texas, but it’s not blanket coverage. There are different situations that can arise that are not covered by your policy including property damage, personal injury to you as the landlord, or liability issues involving an LLC or business. If your rental property is owned by a company, you’ll need to purchase a commercial umbrella insurance policy through the entity to remain covered.

Not Covered by Landlord Insurance

While excess liability coverage is available to help landlords cover more against the same types of losses an umbrella policy may help with, there is a big difference between the two. Both can be helpful for landlords, according to the Texas Department of Insurance (TDI), but umbrella insurance will also protect against slander and libel. These are increasingly important protections in the digital age involving social media, reviews, messaging, etc.

The Growing Importance of Umbrella Insurance for Rental Property

Having an umbrella insurance policy for your rentals is encouraged because there are considerable rising costs that you might be accountable for. This means higher medical costs, increased wages, and larger legal fees. There are economic factors such as inflation that can make these trends even worse and the added emphasis on the increased risk that comes with renting.

The more units you have, the more risk you will also take on, and these rising expenses are adding more pressure to landlord insurance policy limits. An umbrella policy can protect you and your properties should the unthinkable occur.

How Much Umbrella Insurance Do I Need for Rental Property in Texas?

The amount of insurance you’ll need will vary from landlord to landlord. Some property owners may only have one home to insure, others may need to account for multiple properties or an apartment complex. Either way, the more assets you have, the more coverage you’ll need, and vice versa.

In order to qualify for umbrella insurance, you first must have the maximum amount of liability coverage within your landlord policy. An umbrella policy will range in price, but for only a few hundred dollars a month, Texas landlords can receive up to $1 million in coverage. If you have over 20 properties we recommend at least a $5 million umbrella policy.

The best course of action is to consult with your insurance agent while keeping in mind an accurate assessment of the value amount of assets you have, the risks posed to you as a landlord, and the potential for a loss in revenue both now and in the future should a loss prevent a rental from being occupied.

Best Umbrella Insurance for Rental Property in Texas

Finding the best umbrella insurance for your rental property boils down to finding the best coverage for the lowest price. For a number of reasons, insurance brands will all provide different premium rates for landlords as they assess risks differently and the personal factors of each property owner are different.

The general rule is that if you possess less risk as a client you can expect to pay less for your insurance policies but if you are a riskier client, you’ll pay higher rates. Even for the exact same coverage. This is why we have partnered with more than 25 top-rated insurance companies which have the solid financial backing to ensure reliability and a range of products to fit your needs.

By comparing your coverage among different brands, you can pinpoint the best coverage for your needs. This means you receive more options to protect yourself and your property as well as access to more discounts and bundling opportunities.

We work with both personal umbrella insurance and commercial umbrella insurance needs. Freedom Insurance Group can even offer umbrella insurance for multiple rental properties. Working in cities across the Lone Star State, we help landlords save 40% on average on their umbrella insurance for rental properties. Feel free to ask an agent and contact us today at (972) 798-3769 to learn more about your policy options.