What is 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 many responsibilities. Since you are renting your properties out to tenants, you must think of ways to protect your 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 not apply.
To protect your rental property, you can turn to a specialized type of policy known as landlord insurance. It is designed so you will not bear financial losses in case of a disaster.
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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 buildings, equipment, inventory, and even customers’ personal property for covered risks. Additionally, claims 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 Landlord Insurance 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 member or friend for a short time, a homeowner’s policy may suffice. However, if you plan to lease your home for six months to a year, you will need a landlord insurance policy. Generally, landlord insurance is for properties intended for regular and long-term rentals.
If you are not yet a landlord but are considering becoming one, it will be helpful to look into landlord insurance rates. Many landlords benefit from the high demand for rental properties in MA, but calculating the value of your investment should include the cost of such 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 Does a Landlord Policy Provide?
Landlord insurance policies typically include personal property coverage and liability protection. More extensive policies cover loss of income and legal assistance. Like other types of insurance policies, you can select from varying levels of coverage to suit your needs.
Property insurance will cover physical damages caused by one of the named perils in the policy. Wind and fire are commonly covered. This usually only applies to the primary building, though it can be extended to include surrounding structures. Liability protection is for when tenants file a complaint due to an injury that occurred on your property. The insurance policy will help cover associated costs, such as legal settlements or medical fees.
As mentioned, there is something available called loss of income coverage. This covers lost rental 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, this will provide rental income that you would have earned.
- Commercial Property Coverages: Protects against loss and damages to real property (land and buildings) and personal property (everything else) at the premises. A deductible typically applies to each claim.
- 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 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: Protects against 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 must be 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 this protection.
Optional Coverage Enhancements
- Equipment breakdown: 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: Protection for when a substantial part of the building is destroyed and local ordinances require the undamaged portions to be demolished and rebuilt to meet business codes.
- Water Backup of Sewers and Drains: Pays for damages resulting from a backed up drain or sump pump.
- Blanket Insurance: Covers multiple properties with a single agreed limit for all properties.
- 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: Liability protection for employees using vehicles for business purposes that are not owned by the business.
How to Buy Landlord Insurance
Purchasing landlord insurance is an essential step to take before you start renting your property out to tenants. First, determine 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. 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 coverage amount, we can run replacement cost calculations for you. 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 “best” landlord insurance differs from one person to another since each client has unique needs. Premium costs 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 looking for 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, consider American Modern. They have been around for over 50 years now. You can get a single policy to cover 10 or more properties, including those up to 80 years of age.
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. 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 you.
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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 renters insurance 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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