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Texas Apartment Building Insurance: What You Should Know

An apartment building is not just a place to live. It also represents an investment for the owner—and investments require protection. Good insurance can put an owner at ease, which can lead to a more secure life for tenants, particularly in a state like Texas, which has millions of renters.

Across the nearly 270,000 square miles of Texas, you’ll find vastly different types of weather and environmental conditions. This geographic diversity has made it troublesome to obtain commercial property coverage in certain areas, but it’s not impossible: as an owner looking for Texas apartment building insurance, you’re not without options.

4 Challenges in Texas Property Insurance

Texas’s diverse geography, volatile weather patterns, and wide range of natural disasters certainly add risk when insurers create policies. Those difficulties are compounded by the state's rapid economic growth and population expansion, intensifying demand for housing (and comprehensive insurance solutions).

Here are the four biggest difficulties property owners in Texas face when buying apartment insurance:

1. Differences Between North Texas and Gulf-Adjacent Cities

You will not insure a property in North Texas like one near the Gulf of Mexico. North Texas is more susceptible to hail storms and tornadoes, while cities by the Gulf are at a heightened risk of hurricane and flood damage. These regional differences necessitate tailored insurance policies to adequately address the risks of each area.

2. Houston's Changing Insurance Risk Profile

Houston's insurance landscape has undergone a significant transformation. Once deemed a comparatively moderate-risk area, increased instances of flooding and tropical storms have led to its reclassification as very high risk. This shift has had a profound impact on the availability and pricing of property insurance in the region.

3. Increased Risks in the Dallas-Fort Worth Area

The Dallas-Fort Worth metroplex, often referred to as DFW, has recently been categorized as a high wind and hail risk area. This reclassification is a consequence of recent data indicating an uptick in severe weather events, particularly damaging hailstorms, which have become more frequent and intense. Property owners in the region are encountering considerable difficulties finding affordable insurance coverage.Insurers are reassessing their models and adjusting premiums to account for the heightened risk, which results in increased insurance costs. This has prompted property owners to seek out alternative insurance solutions that can offer financial protection against these specific risks without being cost-prohibitive. Those in the DFW area need to balance adequate coverage against the escalating expenses of insurance premiums—a task that demands careful navigation of the insurance marketplace.

4. The Non-Admitted Marketplace Trend

Many apartment insurance policies are being underwritten in the non-admitted marketplace, which typically offers more flexible and varied coverage options. This market is an alternative for properties that face higher risks and, therefore, may not find adequate coverage in the standard insurance market.

Non-Renewals and Continuing Coverage Options

The evolving risk landscape means many property owners in Texas have received non-renewals from their insurance providers. That doesn’t mean they are out of luck, as there is still a competitive market for apartment buildings.

Typical policies today will include:

  • Commercial Property Coverage: Ensures that the physical components of an apartment building, including the main structures and any on-site facilities, are financially protected against damages from risks like fire, storm, or vandalism. For example, if a fire breaks out and damages the structure of an apartment building, property coverage would cover the repairs necessary to restore the building.
  • General Liability Coverage: Protects the property owner against claims of negligence that result in injury or property damage to others. If a tenant or visitor falls and is injured due to a poorly maintained staircase and then files a claim, liability coverage covers the medical bills and legal fees.
  • Discrimination or Employment Practices Insurance: Provides protection and support in cases where the property owner faces allegations of discriminatory practices. For instance, if a property owner is accused of violating fair housing laws and faces a lawsuit, discrimination coverage can help with legal defense and any settlements or judgments.
  • Renters Legal Liability (RLL): Provides property owners with protection against accidental damage caused to the rental unit by residents. RLL acts as a form of gap coverage, which pays for damages up to $100,000 (though there are options for higher limits). It ensures that the owner is not solely dependent on their property policy. This helps maintain lower renewal premiums of the property owner's primary insurance policy. Here's another hypothetical claim example: An apartment owner in Texas incorporates RLL into their lease agreements. A resident accidentally starts a kitchen fire that causes $50,000 in damage to the unit. Instead of the claim affecting the property owner's main insurance policy, RLL covers the damages, preserving the owner's property policy premium and claims history.
  • Flood Coverage: This coverage is crucial in Texas, especially in flood-prone areas. It protects against the damage caused by flooding events—often excluded by standard property insurance policies. Say a flash flood occurs, and water enters the ground-floor units of an apartment complex, causing extensive damage. Flood coverage provides compensation for repairs and restoration.
  • Loss of Rents / Business Income: Offers financial security to property owners by compensating for the loss of rental income if the property becomes uninhabitable due to covered perils. For instance, if a hurricane forces tenants to evacuate and the property cannot be rented out for several months, Loss of Rents provides the owner with the income lost during that period.

LandesBlosch Tips for Apartment Building Owners

Some problems and disasters are simply unavoidable—that’s exactly what insurance is for. Still, there are several steps that you, as an apartment building owner, can take to protect your investment and secure better insurance rates.

  1. Engage with an insurance specialist who is well-versed in apartment properties, as that can lead to more customized, affordable, and appropriate insurance solutions. As we’ve established, apartment buildings are difficult to insure; they often require specialty insurance companies and established relationships in the apartment insurance industry.
  2. Get quotes on different deductible options to find the right balance between annual premium costs and out-of-pocket expenses in the event of a claim. When it comes to insuring Texas apartment properties, there is no rule on which deductible is best; just know that each property will have a deductible sweet spot you need to find.
  3. Create a written weekly maintenance plan. Such a plan is instrumental in mitigating risks because it ensures regular upkeep, inspections, and prompt repairs—all of which have a favorable impact on insurance premiums.
  4. Create a written tenant screening plan. This is vital in maintaining a reliable tenant base and reducing the risk of potential liabilities like high-risk or violent tenants.

Recommended Insurance Carriers for Texas Apartment Buildings

If you’re looking for an insurance carrier, the below companies have the best reputation and pricing. We can help you get a quote from all of them to assess your options—simply contact us here.

Travelers Insurance

Travelers is one of the nation's largest insurers of apartment buildings. They offer quality coverage and fair pricing, and they usually insure higher-end apartments made from steel or concrete. They offer all liability and property coverages in a simple, easily packaged solution.

CrossCover Insurance Services

This non-admitted insurance provider offers coverage to properties that either aren’t new or are in higher-hazard areas, such as Dallas or South Texas. They offer coverage without coinsurance penalties and include all the coverages an apartment owner would need. CrossCover is a property specialist, so our team would help you add a liability policy in addition to a CrossCover quote.

The Bottom Line

While the market for Texas apartment building insurance has become more challenging over the last several years, there are still plenty of opportunities available for owners and organizations that know what to look for. LandesBlosch has decades of experience in helping owners secure the right coverage for their buildings—why not let us help you, too? Contact us today for a free quote.

Austin Landes, CIC

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.

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