Rhodes Insurance: Vacant Dwelling Insurance

Real estate tends to be a good investment – it almost always appreciates over time. Home policies where the owner does not reside in the home are written on a different policy form than owner occupied dwelling. These are called Texas Dwelling Policies (TDPs) and just like the Homeowner policies, there are multiple options. The TDP policy form is used primarily for homes that are tenant occupied (rental homes) or when a homeowner buys a secondary property that will be used as a seasonal home (think vacation home or weekend getaway). These policies can sometimes be a little pricier than the owner occupied simply because the care of the home is somewhat left out of the control of the homeowner. In the insurance business, we call this care, custody, and control. At Rhodes Insurance Agency, we write a lot of these TDP policies and we can offer coverage through multiple carriers. We can even write vacant property which is not something every company can offer.  Unlike auto insurance coverages that tend to be "cut and dried", most folks have no idea that there are multiple policy options for insuring their rental or secondary home and making their policy choice based solely on price can often be a mistake.

Consumers should familiarize themselves with the terms actual cash value (ACV) and replacement cost (RC). These are valuations used by insurers to determine how much and what type of coverage they are going to place on a given home - largely based on the age, construction type and square feet of a given risk. Here is a brief explanation of these 2 valuations: Replacement cost pays to replace or repair your property, based on current costs, without deduction for depreciation; Actual cash value pays to repair or replace your property minus depreciation. While AVC policies are often less expensive than the RC policies, they are also written on a "named peril" basis as opposed to the much broader "open peril" basis that many RC policies are written on.  Please click on the link below for an explanation of the covered perils on the respective policies.

Microsoft Word - Handout_Texas Homeowners Policies_from HO Primer_20180409.docx