How to Buy a Texas Dwelling Policy Form 1 (TDP-1)

The Texas Dwelling Policy Form 1, commonly called the TDP-1, is the state’s most basic property insurance policy for dwellings the owner does not live in full-time. It covers a short list of named perils at actual cash value, which keeps premiums low but leaves meaningful gaps. Landlords, investors, and owners of vacation, seasonal, or vacant homes rely on it because a standard homeowners policy is often unavailable or unnecessary for those properties. Used well, with the right endorsements bolted on, a TDP-1 can be a reasonable fit. Used as sold, straight out of the base form, it often leaves owners exposed to the losses most likely to happen.

Who the TDP-1 Is Built For

A TDP-1 is designed for property owners who do not occupy the insured dwelling as a primary residence. Typical situations include rental properties of any type, vacation or seasonal homes, houses undergoing renovation, coastal dwellings, and older properties that standard homeowners insurers decline to write. If a property sits empty between tenants or is used only part of the year, a dwelling fire policy is often the only coverage a carrier will offer on it.

Owners who have paid off their mortgage sometimes drop down to a TDP-1 as well, since no lender is requiring a broader form. The tradeoff is straightforward. Premiums are lower, and so is the safety net. Anyone choosing this form should understand exactly what it covers, what it excludes, and which endorsements are worth the extra cost.

What the Base Policy Covers

The base TDP-1 is a named-peril policy, meaning it responds only to causes of loss specifically listed in the form. Those perils are:

  • Fire and lightning
  • Smoke damage
  • Windstorm, hurricane, and hail
  • Explosion
  • Aircraft and non-owned vehicles striking the property
  • Riot and civil commotion

Because coverage is limited to what’s listed, the burden falls on you to show that a loss came from one of those events.1Homeowners of America Insurance Company. Covered Peril TDP-1 Form If the cause is not on the list, the policy does not pay.

What the Policy Leaves Out

The gaps in a base TDP-1 are wide enough that every buyer should know them before signing. The form does not cover:

  • Theft. Stolen appliances, copper wiring, or fixtures are not paid.
  • Water damage from plumbing. A burst pipe or accidental discharge from a water heater is not a covered peril.
  • Freeze damage. Broken pipes from freezing temperatures are excluded, which matters more than many Texas landlords expect during a hard freeze.
  • Vandalism and malicious mischief. Spray paint, broken windows, and intentional damage by trespassers fall outside the base coverage.
  • Falling objects. A tree limb through the roof is not covered unless it was driven by a windstorm already listed as a covered peril.
  • Flood. No Texas dwelling policy covers flood; that requires a separate policy through the National Flood Insurance Program or a private flood insurer.
  • Earth movement, including earthquakes and sinkholes.
  • Mold and fungi are generally excluded, though ensuing damage from a covered peril may be treated differently depending on policy language.

Vacant properties are particularly exposed on this list. Empty homes attract theft and vandalism, and a pipe that bursts in an unoccupied house can go undetected for days.

Endorsements That Make the Policy Usable

The base TDP-1 can be expanded through endorsements added for additional premium. Three matter most.

Additional Perils Endorsement

This is the single most impactful add-on. It brings in several perils the base form excludes:

  • Sudden and accidental discharge of water or steam, covering burst pipes and water heater failures. Coverage is typically limited to $10,000 if the dwelling is over 35 years old.
  • Vandalism and malicious mischief
  • Falling trees or limbs
  • Objects falling due to the weight of ice, snow, or sleet
  • Collapse
  • Glass breakage

For landlords, the vandalism and water-discharge coverage alone usually justify the cost.2Homeowners of America Insurance Company. Additional Perils – TDP-1

Personal Liability and Medical Payments

The base TDP-1 includes zero liability coverage. If a tenant’s guest is injured on the property and sues, or a mail carrier trips on a broken step, the policy does not respond. The personal liability and medical payments endorsement adds third-party bodily injury coverage and no-fault medical payments for people hurt on the premises. Without it, the landlord is personally on the hook.

Fair Rental Value

If a covered loss makes the property uninhabitable, fair rental value coverage reimburses lost rent during repairs. Through the Texas FAIR Plan, loss-of-use coverage is set at 10 percent of the dwelling coverage amount.3Texas Department of Insurance. Texas FAIR Plan Association Overview Private insurers may offer different limits. Skip it and a fire that takes three months to repair means three months of zero income with no reimbursement.

Coverage Sections, Limits, and Deductibles

A TDP-1 is divided into coverage sections, each with its own limit. Limits are usually set as percentages of the dwelling coverage amount (Coverage A).

  • Coverage A, the dwelling itself. Through the Texas FAIR Plan, the maximum is $1,000,000.
  • Other structures, such as detached garages, fences, and sheds. Typically limited to 10 percent of the dwelling amount.
  • Personal property, optional on a TDP-1. Covers landlord-owned items at the property, such as appliances, maintenance equipment, and furnishings. Available up to 50 percent of the dwelling amount.
  • Loss of use or fair rental value, typically 10 percent of the dwelling amount when added.

Personal property coverage responds only to the same named perils that apply to the dwelling. If fire destroys a refrigerator you provided for tenants, the policy pays. If the refrigerator is stolen, it doesn’t, unless an endorsement adds theft.3Texas Department of Insurance. Texas FAIR Plan Association Overview

Deductibles are usually a percentage of the dwelling coverage amount rather than a flat dollar figure. Through the Texas FAIR Plan, the options are 1 percent or 2 percent of Coverage A, with the 1 percent deductible restricted to fire and lightning losses. Owners with four or more claims in the preceding three years are not eligible for the 1 percent option.3Texas Department of Insurance. Texas FAIR Plan Association Overview Private carriers may use different structures.

How Claims Pay: Actual Cash Value by Default

Claims under a TDP-1 settle at actual cash value unless you buy up. The insurer calculates repair or replacement cost, then subtracts depreciation for age and condition. A 20-year-old roof destroyed by fire will not produce a check large enough to buy a new roof; the payout reflects what a two-decade-old roof was worth at the time of loss.

Some private insurers offer an optional replacement cost endorsement on the TDP-1 that removes the depreciation deduction.4Foremost Insurance Group. Foremost Texas Dwelling Fire and Homeowners Insurance Premium goes up, but the endorsement can save thousands on a major claim. Replacement cost is not available on TDP-1 policies issued through the Texas FAIR Plan, so owners insured there are locked into actual cash value.

The practical takeaway is to budget for out-of-pocket costs on every claim. The check almost always comes in below the contractor’s invoice, and the gap widens the older the property gets. Owners who can’t absorb that gap should either add the replacement cost endorsement or move up to a TDP-2 or TDP-3.

How to Buy a TDP-1

TDP-1 policies are sold through licensed insurance agents and carriers that write dwelling fire coverage in Texas. The process is straightforward: contact an independent agent, describe the property and how it is used, and request a dwelling fire quote. Independent agents can shop multiple carriers, which matters because pricing and endorsement availability vary significantly from one insurer to the next.

Expect an inspection. Most carriers require a property inspection on homes over five years old before binding coverage. The insurer uses the inspection to assess the roof, electrical system, plumbing, and foundation. Properties in poor condition may be written with exclusions or higher deductibles, or declined outright.

Texas FAIR Plan for Declined Properties

If two or more private insurers decline to cover the property, the Texas FAIR Plan Association is the insurer of last resort. The Texas Legislature created the FAIR Plan to provide essential property insurance for eligible owners who cannot obtain coverage in the regular market.5Texas FAIR Plan Association. Texas FAIR Plan Association Applicants need documentation of at least two declinations from other carriers. FAIR Plan policies use the same TDP-1 form but do not offer every endorsement or option a private carrier might. Replacement cost, as noted, is not available.

Coastal Properties and TWIA

Owners along the Texas coast face an added complication. Many private insurers exclude windstorm and hail coverage in designated coastal counties because of hurricane risk. The Texas Windstorm Insurance Association (TWIA) fills that gap, offering windstorm and hail coverage to properties that cannot obtain it through the regular market.6Texas Windstorm Insurance Association. TWIA Home If a TDP-1 excludes wind and hail in a coastal area, a separate TWIA policy is usually needed to cover that peril. The two policies work in tandem: the TDP-1 handles fire, smoke, and the other named perils, and TWIA carries the wind and hail exposure.

TDP-1, TDP-2, and TDP-3 Compared

Texas offers three standardized dwelling policy forms, and choosing the wrong one is a common and expensive mistake. The TDP-1 is the most basic, covering only the listed named perils at actual cash value. The TDP-2 broadens coverage by adding perils like vandalism and malicious mischief as standard features rather than optional endorsements. The TDP-3 is the broadest: it works as an open-peril policy on the dwelling itself, covering all risks of physical loss unless the policy specifically excludes them.

The jump from TDP-1 to TDP-3 also changes the claims dynamic. Under a TDP-1, you must prove the damage came from a listed peril. Under a TDP-3, the insurer must prove an exclusion applies in order to deny the claim. That shift in burden of proof is worth more than most owners realize until they’re in the middle of a disputed loss. If the property qualifies for a TDP-3 and the premium difference is manageable, that form is usually the better buy. The TDP-1 earns its place when a broader form isn’t available or the property’s use doesn’t justify the cost.