What is a Landlord Insurance?
At first glance, being a landlord may sound like an easy way to earn money, but the truth is, the role comes with several responsibilities. Since you are renting your properties out to tenants, you must think of ways to protect your property investments from potential risks and damages. In many cases, the common assumption is that a homeowner’s insurance alone will suffice. However, this policy is only applicable if you will be residing in the property. Once you start renting it out to tenants, the coverage will no longer apply.
To protect your rental property investments, you can turn to a specialized type of insurance known as the landlord insurance policy. It is designed to protect landlords’ rental properties from several risks, so you will not bear financial losses in case of a disaster. Having a landlord insurance coverage will be necessary to protect you and your properties, so learning more about the best landlord insurance policies will be beneficial in the long run.
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WHAT IS IT?
A landlord insurance policy provides coverage for you as the commercial property owner against financial losses connected with your rental property. The policy covers your building and could also provide liability coverage for claims that may arise.
These are the types of properties that can be covered under a commercial landlord insurance policy.
- Residential Apartments
- Mixed-use Commercial Buildings
- Shopping Centers
- Industrial Buildings
WHY DO I NEED IT?
Commercial Landlord insurance provides coverage for business stuff like buildings, equipment, inventory, and even customers’ personal property for covered risks. Additionally, coverage for business interruption may be covered.
WHO IS IT FOR?
Any landlord or investor who owns commercial real estate can benefit from a landlord insurance policy. Lenders and financial institutions often require commercial landlord insurance coverage.
Who Needs a Landlord Insurance Policy in Massachusetts?
Anyone regularly renting out properties to tenants will benefit from getting a landlord insurance policy. If you need to rent your property to a family, friend, or relative for a short time due to circumstances, the insurance company may allow a homeowner’s policy. However, if you plan to lease your home for six months to a year, you will need to get a landlord insurance policy. Generally, landlord insurance will be necessary for properties that are intended to be used for regular and long-term rentals.
If you are not yet a landlord but already considering investing in some rental properties, it will be helpful to start looking into landlord insurance rates. Many Massachusetts landlords can benefit from the high demand for rental properties in the state, but securing a profitable investment should still be an important consideration when getting a policy. Though landlord insurance is not necessarily mandated by law, it may be required by mortgage lenders to protect their financial interest if anything happens to the property.
What Protections Do Landlord Policies Provide?
Landlord insurance policies typically offer personal property coverage and liability protection, though more extensive policies can offer facilities like loss of income insurance and legal assistance. Like other insurance policies, you can select from varying levels of landlord insurance coverage for rental properties to suit your needs.
Property insurance will cover physical damages caused by one of the named perils–such as fire or a windstorm–in the policy. This portion usually only applies to the property’s primary structure, though it can be extended to include surrounding structures. Liability protection is then applicable for cases where tenants file a complaint due to an injury that occurred in your property. The insurance policy will help cover associated costs, such as legal settlements or medical fees.
While property coverage and liability protection are the two most common forms of protection provided by landlord insurance, you can customize your policy to include more features. One such feature is the loss of income coverage, which will cover lost income that may result from one of the covered perils. If your property is damaged to the extent that it will not be liveable for a certain time, your insurance policy will provide the rental income that you could have earned.
- Commercial Property Coverages: Property insurance provides coverage for loss and damages to real property (land and buildings) and personal property (everything else) at the premises. A deductible typically applies to each loss.
- Buildings and Business Personal Property: Building coverage refers to the actual building and structures, additions, outdoor structures, permanently installed fixtures, and equipment. Business personal property coverage includes property used in the insured’s business including furniture and fixtures, inventory and stock, the property of others in your care, and other similar items not explicitly excluded.
- Employee Dishonesty Coverage: This policy provides coverage that protects an employer from financial or property loss due to the fraudulent activities of employees.
- Inland Marine Insurance: This coverage protects property in transit and the property of others in your care, contractors equipment, and other property not usually left at a fixed location.
- Commercial General Liability Coverages: General liability provides coverage for bodily injury or property damage for which the insured is legally responsible. Additional coverage includes liability for personal injury and advertising injury, medical expenses, accidents occurring on or away from the premises, products, completed operations, and defense costs.
- Medical Payments: Payment for medical expenses resulting from bodily injury caused by an accident on the premises or when prompted by the insured’s operations.
- Fire Damage Limit: This coverage provides specific protection for fire damage to rented premises caused by the insured’s negligence.
- Commercial Umbrella: Also called an excess liability policy, commercial umbrella insurance provides an added layer of protection beyond the limits of your underlying policies. It’s important to remember that all underlying policies are kept up to date during the effective term of your commercial umbrella insurance.
- Directors/Officers Liability: Protection for your company and the directors of your company against claims from stockholders, employees, and clients. Directors can be held legally responsible for acts of the company and often demand the protection of a D&O policy.
Optional Coverage Enhancements
- Equipment breakdown: Often excluded from a standard commercial policy, this optional coverage covers all electronics systems including computers and telephone systems. Protection includes coverage for direct damage, expediting expenses, and business interruption.
- Business Income and Extra Expense: Business income coverage provides the business with lost income during the interruption of business due to a covered claim. Extra expense coverage provides funds for the added costs of the continuation of normal operations until repairs are completed.
- Law and Ordinance: This coverage provides protection for when a substantial part of the building is destroyed and local ordinances require the undamaged portions to be demolished and rebuild to meet business codes.
- Water Backup of Sewers and Drains: This optional coverage pays for damages resulting from a backed up drain or sump pump.
- Blanket Insurance: This coverage provides blanket insurance for multiple properties with a single agreed limit for all properties that are scheduled locations.
- Flood and Earthquake: Flood and earthquake coverage are typically excluded from commercial policies, but are available as buyback coverage and priced according to requested limits.
- Hired and Non-owned Auto Liability: Essential coverage that provides liability protection for employees using vehicles for business purposes that are not owned by the business.
How to Buy a Landlord Insurance Policy in Massachusetts.
Purchasing landlord insurance is an essential step to take before you start renting your property out to tenants. First, you will need to determine your needs to know how much protection you need to get in your insurance. To get started, you can contact any one of our agents to schedule a consultation or ask about any concerns that you may have. Alternatively, you can request an online quote or upload your current policy, then allow us to contact you to discuss your options. No matter what type of policy or budget requirements you may have, our agents can help you look through your options and find the best policy for your needs.
In terms of the insurance amount, getting adequate insurance coverage is essential to protect your property investments. Thus, we will work with you to run a replacement cost calculation to determine your property’s actual replacement value. As for personal property coverage, you will need to make a list of all the possessions that you want to cover in your policy. From there, we can help you determine a sufficient amount to cover all your belongings.
Best Landlord Insurance and Rates in Massachusetts
What is considered to be the best landlord insurance may differ from one person to another since each client has unique needs. Premium costs may also vary based on your property’s value and condition, so you must compare rates based on the coverage inclusions, price, and company reputation. If you are unfamiliar with landlord insurance in Massachusetts, you can look at some of our partnered insurance carriers and their policies.
If you are looking for some discounts to reduce your insurance expense, you can check out Liberty Mutual’s customizable landlord insurance. The standard policy comes with physical property and liability coverage, but you can add inclusions like personal property, inflation protection, and umbrella coverage. The company also provides discounts if you have a claims-free record for at least five years or get a quote from them before your current policy expires.
If you have multiple rental properties and have been a landlord for several years, American Modern is one of the well-known insurance companies that has been around for over 50 years now. You can get a single policy to cover for 10 or more properties, including those up to 80 years of age. However, even if you are only starting in the landlord business, you can still find a simple policy to suit properties in good condition.
If you want lots of flexibility in personalizing your landlord policy, you can opt for Safeco’s landlord insurance. The company can cover up to 16 units and offers a wide range of coverage options, so you can get the maximum protection you need. Besides personal property, liability, and lawsuit protection, you can also get limited liability coverage (LLC) to separate your rental properties from your personal assets.
The companies above are only some of the insurance providers that we represent. Rest assured, our team will take the time to learn about your insurance needs to connect you with the company best suited for your needs.
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Landlord Insurance Frequently Asked Questions
The limit of coverage can be found within the insurance coverage section of your policy.
No. Landlord insurance covers the dwelling, attached structures, and personal property used to service the rental. Your tenants can purchase a renter’s policy to protect their possessions.
While laws don’t require tenants to purchase renters insurance, it is within your rights to add this requirement to the rental agreement. A landlord can also require a specific amount of insurance, proof of coverage, and require the tenant to keep the policy active for the duration of the lease.
The cost of landlord insurance varies due to several factors including
• The type and size of the construction
• Age and condition of the building
• How many rental units you have
• Whether you have a swimming pool
• Whether you allow smokers to rent from you
• Whether you have burglar alarms
• The presence of installed fire sprinklers
• Whether your electrical wiring is up to current code
Commercial landlord insurance provides additional protection to cover the liability risks associated with renting your building to a third party business. Additionally, you’re covered for the costs associated with lost income due to the interruption of business for a covered claim.
Learn More About Landlord Insurance
Protecting your investment with a commercial renters insurance policy can help you avoid significant financial losses. To learn more about finding a commercial landlord insurance policy that meets your unique needs, get in touch with the LoPriore team today. Our experienced agents can provide you with expert advice, a quick quote on the policy you need, and answers to your questions.
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