If you own a rental house in Texas, the policy on it is almost certainly a dwelling policy, and somewhere on the declarations page is a form number: DP-1, DP-2 or DP-3. That one digit decides whether a hailstorm pays for a new roof or a depreciated one, whether a burst pipe is covered at all, and whether the carrier owes you anything for the months the house sits empty afterward. Here is what the three forms do, what none of them do, and how to read your own in two minutes.

Where the forms come from

The dwelling program is the industry’s standard set of policies for a house that is not owner-occupied, which is why landlord insurance is often just called a dwelling fire policy. The forms are numbered by how broad they are: DP-1 is the basic form, DP-2 the broad form, DP-3 the special form. Texas carriers file their own versions, so your declarations page may say “Dwelling Special Form,” “TDP-3,” a carrier’s own name, or simply DP-3, but nearly all of them follow the same pattern.

DP-1: named perils, actual cash value

The basic form covers a short, specific list of causes of loss: fire, lightning and internal explosion, plus what the trade calls extended coverage, which adds windstorm, hail, explosion, riot, aircraft, vehicles and smoke. Vandalism is usually an optional add-on. If the cause of a loss is not on the list, the loss is not covered.

Notice what is missing. Water damage from a plumbing failure. Falling objects. Weight of ice. Theft of the appliances you provide. Freezing pipes. In Texas, where a February freeze or a slab leak is a routine claim, those are not edge cases.

The second feature of the DP-1 is how it pays: typically actual cash value, meaning replacement cost minus depreciation. On a fifteen-year-old roof, depreciation can take most of the claim. A DP-1 is the policy that produces the phone call where the landlord learns that a roof the contractor priced at a full replacement is being paid as a fraction of that, and that the difference is theirs.

Where it fits: a vacant house, a property mid-renovation, a very low-value structure, or a lender minimum on a short hold. It is inexpensive because it does not cover very much. For a habitable rental with a long-term tenant it is usually the wrong form, and it is often the one a landlord ends up on because it produced the lowest quote.

DP-2: the middle form

The broad form keeps the named-perils structure but lengthens the list: damage from burglary, falling objects, weight of ice and snow, accidental discharge or overflow of water from plumbing and appliances, freezing, and sudden damage from artificially generated electricity, among others. Dwelling losses are generally settled at replacement cost rather than actual cash value.

A DP-2 closes most of the holes that matter in Texas, particularly water and freeze. It is still a named-perils form, so anything not on the list is still excluded, and some carriers simply do not offer it, moving straight from DP-1 to DP-3.

DP-3: open perils on the structure

The special form flips the logic. Instead of listing what is covered, it covers the dwelling and other structures against any cause of loss except the ones it specifically excludes. The standard exclusions are the familiar ones: flood and surface water, earth movement, wear and tear and deterioration, neglect, intentional acts, vermin, and limited treatment of mold and of building-code upgrades unless endorsed. Everything else is in.

Two things to know. First, the open-perils promise applies to the structure; your personal property in the house, meaning appliances and anything else you furnish, is still usually on a named-perils basis. Second, replacement cost on the dwelling is standard, which is the single most valuable difference from a DP-1 after a Texas hailstorm.

For a habitable, tenant-occupied rental, the DP-3 is the default answer. The premium step up from a DP-1 is real but modest compared with the gap between a depreciated roof payment and a full one.

What none of the three includes by default

Liability. This surprises people. The dwelling forms are property contracts. Landlord liability, the coverage that responds when a tenant or a guest is injured on the property, is added by endorsement or written as a companion policy. Most “landlord packages” include it, but it is worth confirming: look for a premises liability line and a limit on the declarations page, not just a form number. If there is no liability line, there is no liability coverage, whatever the agent who sold it called the policy.

Flood. Excluded on all three. A separate flood policy, through the national program or a private carrier, is the only way to cover rising water, and large parts of Houston, the coast and Central Texas qualify as places where that matters.

Coastal wind. On the Texas coast, wind and hail are often removed from the dwelling policy and written separately through the state windstorm pool. A coastal DP-3 that looks complete may have the single biggest peril carved out.

Loss of rents, called fair rental value in the forms, is part of the dwelling program, but the limit, the waiting period and whether it is automatic or optional vary by carrier. It is the coverage that pays the mortgage while the house is uninhabitable after a covered loss, and it deserves a deliberate limit rather than a default.

How Texas changes the comparison

Hail decides it. Roofs are the most common Texas property claim, and the actual-cash-value settlement on a DP-1 is where the money disappears. Note that roof terms have been tightening across all three forms: schedules that pay older roofs at actual cash value even on a replacement-cost policy, and endorsements that exclude cosmetic hail damage, are now common on Texas rentals. The form number is the first thing to check; the roof endorsement is the second.

Wind and hail deductibles on Texas dwelling policies are usually a percentage of the dwelling limit rather than a flat dollar amount, and the percentage you choose is one of the larger levers on premium. More on that in our guide to what landlord insurance costs in Texas.

Freeze. The 2021 winter storm turned burst pipes into the defining Texas claim of the decade. Freezing is a named peril on the DP-2 and covered on the DP-3; it is not on the DP-1 at all.

Vacancy. Every dwelling form restricts coverage once a property has been vacant for a stated period, commonly sixty days, after which vandalism, glass breakage and water damage typically drop out. Turnover between tenants is normal; a long gap, a renovation, or a house you are holding to sell needs a vacancy endorsement or a different policy. A house that is furnished and listed for short-term guests is a third case entirely, covered in our article on insuring Airbnb and Vrbo properties in Texas.

How to read your declarations page in two minutes

Which one should you have

For a tenant-occupied rental you intend to keep: a DP-3 with replacement cost on the dwelling, a liability limit you have chosen deliberately, loss of rents sized to the actual rent, and a wind/hail deductible you could pay tomorrow. For a vacant property or a renovation: a vacancy-appropriate policy, which may be a DP-1 or a builder’s risk form, for as long as that situation lasts and no longer. The DP-1 you have because it was cheapest is the one to re-examine, and the right moment is before the storm season, not after it.

If you are not sure which form you are on, we will read the declarations page with you. Call us at (469) 513-3379 or start from our landlord insurance page; the rental markets we work most are listed there, from Frisco and Fort Worth to Round Rock, Houston and San Antonio.