Protect Your Investment Properties
If you’re an investor or landlord in MA, you need an insurance policy designed to protect each of your investments. When you rent your property to others, unpleasant situations can arise, leaving you with significant losses.
Levels of coverage vary, but your policy may cover incidents like property damage caused by tenants, loss of rental income, accidents to additional buildings on the property. Whether your investment property is a multi-family home, a single-family home, a condo unit, or an apartment, the right insurance policy can provide you with the protection you need.
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What is Rental Property Insurance?
Rental Property Insurance protects property investors in the event of damage or loss to a dwelling while it is rented or leased to tenants.
It is also referred to as landlord insurance as it helps protect landlords from the risks associated with renting out your properties for long periods, including damages caused wilfully by your tenants, such as stealing or vandalism.
A rental property insurance policy differs from a homeowner’s insurance as it is specifically made for rental investments. Depending on the type of property you are renting out, there are suitable policies that can keep your asset protected.
Do I Need Insurance for Rental Property in Massachusetts?
Property owners and landlords need rental insurance to cover special circumstances that a general homeowner’s policy doesn’t cover.
Landlords in Massachusetts make significant investments in properties they intend to rent out. This investment needs to be safeguarded against losses.
Rental property insurance is specially crafted for the needs of people who are willing to rent out their property to others. Although this policy may seem similar to a homeowners insurance policy, there are significant differences as both serve different purposes.
A homeowners insurance policy protects your primary residence in case of loss arising from natural calamities or due to theft and burglary. You can also choose additional coverage such as liability coverage.
However, when you plan to rent out your primary residence or a second property for a longer duration, you need to consider securing the best rental property insurance in your area. This is to protect you and your rental property against significant losses.
Who Needs Rental Property Coverage?
It’s clear that rental property insurance benefits investors of rental properties. What about if you own a home and want to rent it out for a significant period of time? Homeowner’s insurance policies only apply for owner-occupied properties, with some covering for infrequent short-term rentals.
This type of insurance is made for any property owner who has tenant-occupied properties intended for long-term renting or frequent short-term renting.
If you also live in the property you are renting, the need for rental property insurance will depend on your circumstances. For example, if you rent out your basement while you are away for vacation, your homeowner’s insurance may cover this. However, if you rent out this area regularly, you will need to get a separate policy, i.e., a landlord insurance policy.
What Does Massachusetts Rental Property Insurance Cover?
Specific coverage details depend on the policy and provider that you choose. Still, generally, it will include dwelling coverage from common perils, liability coverage, and loss of rental income.
Rental Policies Offered by LoPriore
At LoPriore Insurance Agency we understand how much your home means to you and the investment you put into it. You cannot look after your house 24/7, nor can you stop your house from regular wear and tear.
This is why we offer three different policies for rental property insurance. By choosing the right coverage, you can easily face the cost of repairs without having to depend on your rental income or cashing out money from your own pocket.
Do not hesitate to reach out to our team if you have questions or concerns about them. Our insurance solutions are designed to fit your lifestyle and budget.
With three different rental property insurance policies to choose from, we’ve ensured that you don’t face the dilemma of going with a one-size-fits-all plan that either offers too little or too much coverage than you actually require.
- Dwelling Coverage
Like homeowner’s insurance, rental property insurance protects your property from physical damage resulting from risks like fire, lightning, wind, and others. Each policy will include covered perils, and its coverage will only extend up to the damage caused by them.
Some perils, such as vandalism and burglary, are typically not included in standard policies. However, you may have the option to purchase them to add to your policy if you desire. Other disasters like flooding and earthquakes are also excluded in most regular policies, so add them if you want.
- Liability Coverage
If anyone is injured on your property and you are held responsible, liability coverage will help pay for medical or legal fees associated with the incident. Your rental property insurance in MA will only cover costs up to your policy limits. If you feel this may not be enough to cover your liabilities, you can opt to get umbrella insurance for your property.
- Loss of Rental Income
This part of the policy helps cover for rental payments that may be lost if a covered peril causes your property to become uninhabitable. Similar to liability coverage, loss of rent coverage can pay up to the extent of a specific amount as a replacement for rent that you could have earned if your property was not damaged.
Aside from perils other than those specifically named in your policy, maintenance and tenants’ possessions are typically not included in a rental property policy. Some policies may also not cover sewerage problems, particularly if the problem happens on a street level.
Further, the coverage you choose may be based on the property you need to protect or the flexibility you need.
Dwelling Fire Basic Form Policy (DP-1)
The DP-1 policy is the most affordable and provides only the most basic coverage. Your DP-1 form will list the events covered by this policy explicitly so you’ll have a clear understanding of what’s covered and what isn’t. Thus, in the event of a claim, you will be paid for covered damage minus depreciation (wear and tear that occurs over time). DP-1 coverage includes:
- Fire & lightning
- Windstorm and hail
- Volcanic explosion
- Reimbursement of rental income up to 12 months when a covered event makes the dwelling unfit to rent.
Dwelling Fire Broad Form Policy (DP-2)
The DP-2 policy provides broader coverage than the DP-1. Covered events are listed on the policy for clarity, including additional events not covered by the basic form. Reimbursement for DP-2 generally provides current replacement costs without considering depreciation. DP-2 coverage includes the same coverage as the basic policy with these additions:
- Burglary damage
- Glass breakage
- Falling objects
- Frozen pipes
- Accidental water overflow
- Weight of ice and snow
- Electrical damage
Dwelling Fire Special Form Policy (DP-3)
The DP-3 policy provides the most extensive coverage for investment landowners and landlords. Instead of listing covered perils, the DP-3 policy covers all events except for those explicitly excluded on the form. Reimbursement for a claim with the DP-3 is similar to the DP-2, providing current replacement costs without depreciation. DP-3 coverage includes coverage for most risks. Exclusions include:
- Ordinance or law
- Nuclear hazard
- Flood/water damage
- Earth movement
- Power failure
- Governmental action
- Intentional loss
At LoPriore, our motto is insurance that fits your lifestyle. That’s why we include additional choices to fit your unique needs. Thus, if the standard coverage supplied by your chosen policy is insufficient for your needs, you can purchase additional optional coverage to support your policy. Additional options include:
- Personal liability and medical coverage for tenants or visitors in the event they’re injured on the property
While a broad form policy usually provides adequate coverage, special circumstances may occur where you need extra protection. If you need rental insurance beyond the typical coverage, you can add an umbrella policy to your dwelling fire policy.
How Much Does Rental Property Insurance Cost in MA?
A rental property insurance policy can vary in price based on the provider, type of policy, and extent of coverage that you choose. Massachusetts is a state with diverse housing needs, with nearly 40% of its homes rented by tenants. Thus, it has promising potential for income opportunities, should you be interested in becoming a landlord.
On average, the nationwide rental property insurance cost is approximately $1,350 annually. This is 20-25% higher than the price of a homeowner’s insurance policy, due to the unique risks associated with renting to tenants.
It is difficult to pinpoint a specific price for rental property policies since it can fluctuate significantly based on many factors.
Get in touch with any of our insurance agents today for a rental property insurance quote. Our team will work hard to provide you with your insurance options and help you compare quotes to determine the most suitable policy for your needs.
Rental Property Insurance Consideration
A common question that is often asked while inquiring about rental property insurance is whether you need rental property insurance if you have homeowners insurance?
Well, the answer can be “yes” and “no”, depending on how long you intend to lease your property. The presence of tenants on your rental property increases the chances of unique risks that a homeowners insurance policy won’t sufficiently cover.
If you rent out your property, the rental duration can be divided into three categories; long-term renting, infrequent short-term renting and frequent short-term renting.
If you want to rent your primary property, second home, investment property or vacation home to tenants for six months or longer, then you need to invest in good rental property insurance.
Infrequent Short-term Renting
If you intend to rent your property for a short duration, say for a week or two or over the weekends, your homeowners insurance might be enough to cover the risks associated with renting your home. But, a wise thing to do in such a case is to find a homeowners insurance provider where you can opt for additional coverage to safeguard you from minor risks associated with renting out your property for short term rentals.
Frequent Short-term Renting
If you are planning to rent your property to different tenants for a short term but frequently, chances are your property might not be covered under the homeowners insurance policy or rental property insurance. Your property may fall under a business category such as Airbnb and you may need a commercial insurance policy to safeguard that property from any sort of risks.
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If you’re new to rental properties and the potential difficulties that could arise, you may have questions about your insurance needs. Thus, here are a few of the questions our current customers have asked.
Rental Property Insurance FAQs
While both policies have similarities, a renter’s insurance policy has features designed to protect your property while tenants are living there. Rental insurance insures the value of the dwelling in the same way a homeowners insurance policy does. It also has additional liability coverage for your tenants and coverage for damages by non-owners.
Like homeowners insurance, you’re not required by law to purchase rental property insurance in Massachusetts. However, if the property isn’t paid for, your mortgage may require it. While rental insurance isn’t required by law, it’s a good way to avoid significant debt or total loss in the event of a disaster.
As a landlord, you may need to leave items on the property for routine maintenance. Common possessions covered by the policy include lawnmowers, garden equipment, tools, and other maintenance equipment. However, your rental property insurance does not protect the personal property of your tenants.
Yes. Your insurance premiums may be tax-deductible because your rental property is a business investment. Some exclusions apply, so it’s important to discuss your personal situation with your tax advisor.
Structures attached to the main dwelling, like the porch or deck, are automatically covered along with the building. Further, policies can include other unattached buildings, like a garden shed or garage.
Choose LoPriore for Your Rental Property Insurance in Massachusetts
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