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A Step By Step Guide to Choosing Landlord Insurance

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Landlord Insurance

There are over 45 million rental properties available in the United States — many of which are businesses and homes. In fact, in Massachusetts alone, there are over 600,000 businesses that provide critical services to the public. And behind every business and every rental home is a landlord.

For landlords, rental property is a massive investment that requires consistent upkeep, valuable attention, and the right insurance policy to protect it from damages. But how do you protect your property, and what kind of insurance do you need?

Today, we’re going to go over landlord insurance, why it’s essential, and how to pick the best possible landlord insurance policy for your needs.

What is a Landlord Insurance Policy?

When you decide to rent a property or multiple properties, you are inheriting unique risks that a typical homeowner doesn’t have to worry about. The standard homeowner’s insurance package doesn’t protect you against tenant property damages or tenant liability — both of which are a necessity for landlords looking to gain adequate insurance protection to cover any significant costs.

Landlord insurance policies are custom-tailored, and may include:

  • Personal or commercial property damages
  • Medical liability claims for tenants or commercial properties
  • Fire damage
  • Protection against specific perils
  • and many more unique coverage options

While only 37% of renters have renters insurance, landlord insurance is typically an immediate concern for landlords. Not only is your property a significant investment, but you’re putting it in the hands of someone else. Acquiring the appropriate insurance can help protect you, your property, and your tenants from significant financial struggles.

Who Needs Landlord Insurance?

While the primary goal of landlord insurance is to protect against financial damages attributed to your properties, many landlords fail to understand the full scope of landlord insurance. Not only does landlord insurance protect property, but it can protect against medical claims that happen on the property. For example, if you rent out a commercial property and someone slips and falls on the premise, landlord insurance with medical coverage may help protect you from damages.

Depending upon the package, landlord insurance may also have general liability coverage to protect against lawsuits — including defense coverage for claims brought against them.
Landlord insurance may also cover more than the building property and tenant liability. Inland Marine insurance can protect property in transit as well — including expensive commercial equipment.

Landlord Insurance

Step By Step Guide to Choosing the Right Landlord Insurance Package

Here are some steps that will help you choose the right landlord insurance for your specific property needs.

Step 1: Determine Your Property Type

Landlord insurance packages can cover the following types of properties:

  • Non-owner occupied residential homes with 1 – 4 tenants
  • Apartment buildings
  • Multi-unit complexes
  • Commercial properties
  • Mixed-use properties
  • Condominiums
  • Industrial
  • Office
  • Retail

Your specific property type will introduce unique packages that can help shield you against damages from your occupant type. For example, simple landlord insurance for residential homes can cover property damage, but it typically does not cover the tenant’s property. However, many commercial landlords choose to invest in insurance that covers personal property — since that property may be rented or loaned to the occupants.

Step 2: Understanding the Three Basic Types of Landlord Insurance

There are three primary types of landlord insurance:

  • Dwelling Fire Insurance Policy
  • Business Owners Policy (BOP)
  • Commercial Packages Policy (CPP)

Dwelling Fire Insurance Policy

Despite the name, Dwelling Fire Insurance Policies cover more than simply fire damage. Like many landlord insurance options, Dwelling Fire Insurance is “a la carte” and capable of covering a wide variety of damage types, including:

  • Fire
  • Lightning
  • Explosions (Internal & External)
  • Wind
  • Hail
  • Vandalism
  • Civil commotion
  • Smoke
  • Falling objects
  • Electrical damage
  • etc.

Business Owners Policy (BOP)

This type of insurance is for landlords that have multiple locations or those that have many units per building. The easiest way to think about a BOP is that it combines property insurance with general liability insurance. In other words, this type of insurance typically protects both your property and your business from medical claims.
Again, there are many ways to customize your BOP insurance. Your business’s unique needs will play a role in the final package you construct with your insurer.

Commercial Packages Policy (CPP)

The Commercial Packages Policy is best used for buildings with over 150 units. Like other landlord insurance packages, CPP is highly customizable and may name specific perils on the policy. These insurance packages may also be bundled with broader coverage items such as Hired and Non-owned Auto Liability, Business Income and Extra Expense, or even Equipment Breakdown Insurance.

Step 3: Think About Your Specific Needs

Once you know your property type and basic insurance type, you need to think about what unique coverage options you may require. These may include:

  • Employee Dishonesty Coverage: This policy protects you against monetary damage from fraudulent employee activities.
  • Inland Marine Insurance: This policy protects the property in transit as well as specialized on-site property.
  • Medical Payments: Protects against medical bills resulting from an accident occurring on the insured’s covered property that resulted from the insured’s operations.
  • Hired and Non-owned Auto Liability: This policy protects company vehicles (and employee vehicles) from damages resulting from business needs. For example, if an employee receives vehicle damage while grabbing coffee for work, their damage may be covered.
  • Commercial Umbrella: This policy protects landlords above and beyond the limits of primary and underlying liability policies. Limits start at $1,000,000 and can go as high as $100,000,000.
  • Equipment Breakdown – Boiler and Machinery Insurance: Despite the name, this protects a wide variety of business equipment — including computers and telephones.
  • Law and Ordinance: This policy includes the cost of demolition and debris removal in unique cases, as well as some of the costs associated with complying with the Americans with Disabilities Act.
  • Water Back up of Sewer and Drains: This policy protects you against water damage from backed-up sewers and drains.
  • Business Income and Extra Expense: This policy protects against loss-of-income during a claim.
  • Flood and Earthquake: You may also opt to purchase a separate policy to protect against floods and earthquakes
  • Directors/Officers Liability: This policy protects Directors against claims from stockholders, clients, and employees.

To learn more about some of these policies, please see our page on Landlord Insurance.

Step 4: Contact Your Local Landlord Insurance Agent

Once you have a general idea of the type of landlord insurance you need, it’s time to reach out to your independent insurance agent for a quote. When you talk to them, be sure to include the type of insurance you need and some of the optional policies that may help protect you, your property, your business, and your tenants/employees. Independent insurance agents will shop around for the best possible insurance for your specific property needs.
Are you a landlord or business owner in Massachusetts? Contact us to learn about our incredibly diverse range of landlord insurance options. Or request a quote to learn how we can help keep you protected.

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