Texas DP-1 Insurance

What you are insuring

The Texas Department of Insurance says the building owner’s policy is what pays to repair the house. Renters insurance does not. If you own a rental, Texas DP-1 insurance is one of the building forms an agent may offer. Dwelling coverage, in TDI’s home guide, pays if the house is damaged or destroyed by something the policy covers. Other structures coverage pays for detached garages, sheds, and fences. Personal property on a dwelling policy, when you buy it, is property usual to the occupancy, not the tenant’s furniture. Tell the tenant to carry their own policy. TDI is explicit that the owner’s insurance does not replace the renter’s belongings.

Named perils and open perils are different promises. TDI says a named-perils policy pays only for events listed in the policy. An all-risk, or open-perils, policy covers events the policy does not specifically exclude, and even those policies usually skip termites, wear and tear, sewer backup, flood, earthquake, mold removal, and foundation repair. A DP-1 quote is the named-perils end of that spectrum. Read the list titled perils insured against. If a cause is not listed, do not expect a claim payment.

The basic list, and what is optional

DP-1 is the basic form. It typically covers fire, lightning, and internal explosion. When a premium for extended coverage is shown on the declarations, the form can also include windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, and volcanic eruption, subject to exclusions. Vandalism or malicious mischief may be available to add. Talk to the agent about whether those boxes are on your quote. A Texas carrier can use its own wording. Match that usual shape of a basic form to the pages in front of you.

That optional extended-coverage block is where landlords get surprised. A basic fire form that never shows a wind or hail premium does not become a hurricane policy because the house is in Texas. TDI says windstorm, hurricane, and hail are on most home policies except on the Gulf Coast, where the home policy may not include them at all. If the rental is on the coast, ask whether wind and hail are inside this DP-1 or whether they have to be bought separately. Our windstorm insurance guide is that separate question. Flood is not in the basic list. TDI says most policies do not cover flooding. Buy flood on its own if rising water matters.

Actual cash value unless you buy something else

DP-1 claims are usually settled on an actual cash value basis, and that you may be able to buy replacement cost for an additional premium. Actual cash value pays with depreciation taken out. Replacement cost aims at today’s price to repair or replace. TDI’s home guide uses a roof example: a replacement-cost policy pays the current price of a new roof, minus the deductible, while actual cash value pays less because of depreciation. Ask which settlement the DP-1 quote uses for the dwelling. Do not assume a rental house is on replacement cost because your own home is.

The guide also says a DP-1 can provide coverage for other structures, personal property usual to the dwelling, fair rental value, debris removal, and improvements, alterations, and additions. “Can provide” is not “always includes.” Fair rental value is the landlord’s version of being paid when a covered loss stops the rent. Ask whether it is on the form, what limit it has, and whether it pays only during repairs from a listed peril. If the house is empty because the tenant moved out, that is not the same as a covered loss making it unlivable. TDI says many policies do not pay for losses when a house is vacant for the number of days the policy specifies. Read that number. We will not invent one.

What this form is a poor fit for

A basic named-perils policy is often chosen because the premium is lower. TDI says named-perils policies are cheaper and might not provide the coverage you need. Some cover fire, lightning, explosion, theft, and vandalism. Others cover a short list. Theft of the landlord’s appliances is not automatic on a basic fire form. The dwelling guide’s basic list does not name theft. If you leave a refrigerator and a set of window units for the next tenant, ask whether theft of that property is covered or must be added.

Water from a burst pipe is another gap people assume is standard. TDI says many home policies cover sudden and accidental release of water, and do not cover a continuous leak. A basic DP-1 that only lists fire, lightning, and internal explosion does not, on that description, include sudden discharge of water unless the form you bought adds it. Do not import a broader form’s water coverage onto a basic quote. If the tenant reports a leak, the building repair may be your maintenance problem rather than a claim. Mold that follows an uncovered leak is not a back door into coverage. TDI says policies generally will not pay mold removal except to repair damage caused by a covered risk.

Short-term rentals are a different use. TDI says most policies will not pay for damages or injuries that occur during short-term rentals, and that you should ask the agent if you rent the house that way. A DP-1 written for a long-term tenant can be the wrong contract for weekend guests. Say how you rent.

Liability, debris, and the tenant’s mistake

TDI describes personal liability as the part of a home policy that pays medical bills, lost wages, and other costs when you are responsible for injuring someone, and that also pays if you damage someone else’s property, plus court costs if you are sued. A basic dwelling quote does not always include that part. Ask. A guest who falls on a broken step may be a premises claim, a maintenance problem, or neither, depending on the form and the facts. Do not assume the fire policy answers it.

Debris removal and improvements, alterations, and additions are items a DP-1 can include. After a fire, hauling off the ruined structure is its own cost. After a tenant paints or builds a closet with your permission, ask whether that work is part of the dwelling limit or needs its own amount. The tenant’s clothes and electronics remain outside this contract. Point them to renters coverage. If they cause a fire that the basic form covers, the building claim is yours. Their belongings are theirs.

Keep photos of the house when a tenant moves in and when they move out. A basic form pays listed perils, not ordinary wear. Worn carpet is not a fire. A scorch from a covered fire is a different conversation, and only if fire is on the perils list, which on a DP-1 it typically is. Document the difference before you call it a claim.

How to compare it with broader forms

Broader dwelling forms exist for a reason. A DP-2 quote is still named perils, with a longer list, and a DP-3 quote is usually open perils on the building. Those pages are Texas DP-2 insurance and Texas DP-3 insurance. Moving up is not automatically right for every house. An older rental you could not rebuild, or a house you are about to sell, can be a basic-form conversation. A house with a loan, a new roof, and a long-term tenant is often a broader-form conversation. Price them on the same deductible. TDI says a higher deductible lowers the premium and raises what you pay on a claim.

Texas Insurance Resources can help you put a DP-1 next to a broader quote through licensed agents. We do not decide claims. The overview of rental-property coverage is our landlord insurance guide.

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Sources

Texas details on this page come from TDI where we cite them. Where a form in Texas differs, the form wins.

• Texas Department of Insurance, “Home insurance policies: All risk or named peril”.
• Texas Department of Insurance home insurance guide.
• Texas Department of Insurance renters insurance tip.