Landlord vs Dwelling insurance

[Catherine Clare]

I use a great local insurance company for my personal home.  It's actually a non-profit, mutual insurance association.  I asked them if they offer landlord insurance and they responded:

We insure rental dwellings, but we don't provide landlord insurance. The Texas Department of Insurance doesn't allow farm mutual insurance companies to directly provide liability insurance, so that's why it is dwelling (property) only.

Can someone help me understand what this means?  Would I still be able to insure my rental with them, but just not have coverage for missed rent?  Would this a problem for getting a mortgage?

[Michael Koeplin]

I think James is right on this.

The key distinction is property coverage versus liability coverage. It sounds like they may be willing to insure the building itself, meaning fire, wind, water damage, etc., depending on the policy. But they are saying they cannot provide the liability side.

That would matter to me more than the missed rent issue. Loss of rents may or may not be included in a dwelling policy, so she would need to ask about that specifically. But liability is the bigger concern because that is what responds if a tenant or guest gets hurt and sues.

In theory, yes, she might be able to pair a dwelling-only policy with a separate liability policy or umbrella/commercial liability policy, but I would want the agent to put that in writing and make sure there are no gaps between the two policies.

I’d also check with the lender before assuming it satisfies the mortgage requirements. A lender may only care that the building is insured, but some may have their own requirements. Either way, I wouldn’t own a rental with property coverage only and no liability coverage.