Protection for Your Rental Property and Real Estate Investment
If you’re an investor or landlord, you need an insurance policy designed to protect your investment. When you rent your property to others, unique 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 earnings, accident liability, and additional buildings on the property. Whether your investment property is a multi-family home, a single-family home, a condo unit, or an apartment, a dwelling fire insurance policy can provide you the protection you need.
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What is Rental Property Insurance?
Rental Property Insurance (sometimes called Dwelling Fire Insurance or DP-3 Insurance Policy) is a policy designed to protect landlords and 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.
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 assets protected. Feel free to contact any of our agents who can help you determine the best policy to fit your needs.
Why Do I Need Insurance for Rental Property?
Property owners and landlords need rental insurance to cover special circumstances that a general homeowner’s policy doesn’t cover.
Who in Massachusetts Needs Rental Property Coverage?
Rental Property Insurance protects Investors and landlords looking to purchase a comprehensive insurance policy tailored to protect their rental properties adequately in the event of a loss. Homeowner’s insurance policies only apply for owner-occupied properties, with some covering for infrequent short-term rentals.
However, if you have properties intended for long-term rentals to gain a source of income, you will need insurance for a rental property to protect your investments. Thus, 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, a landlord insurance policy.
What Coverages Do Rental Property Policies Provide?
Renter’s Insurance/Dwelling Fire Insurance provides owners and investors with various choices to cover their unique property needs.
The specific coverage details will 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.
- 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 as extra coverage for your policy if you want more extensive coverage. Other disasters like flooding and earthquake are also excluded in most regular policies, so you may need to get flood insurance or an earthquake rider for additional protection.
- Liability Coverage
If anyone is injured on your property and you are held responsible, liability coverage will help you 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 these are not 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. Like 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. LoPriore Insurance Agency offers three different policies for Rental Insurance. Do not hesitate to reach out to our team if you have questions or concerns about them.
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 is similar to the DP-1 policy but provides broader coverage. 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. In fact, this form covers a broad range of events. 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. In fact, 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 Do Rental Property Policies Cost?
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 known to be a city 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.
The nationwide average for landlord insurance is approximately $1,350 annually. It is slightly higher than the price of a homeowner’s insurance policy, about 20-25% higher, due to the unique risks associated with renting out your properties to tenants. Nonetheless, 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.
Do Rental Property Policies Cover Tenants?
Rental property policies generally do not cover your tenants’ personal belongings, as this is covered by another type of insurance known as the renter’s policy. As a landlord, it is generally recommended that you ask your tenants for proof of their renter’s insurance before allowing them to lease your property. This way, you can avoid conflicts that may occur, should anything happen to their belongings on your property.
How Can Investment Property Owners in Massachusetts Get Rental Property Insurance?
If you are interested in getting rental property insurance in Massachusetts, you can start by contacting our independent insurance agents to learn about your options. Our agents can connect you with our partner insurance companies who offer different rental property policies. With this, we can assist you with comparing quotes and customizing your policy to tailor-fit all your needs and requirements.
As a landlord, your policy needs will depend on the type of property you are renting out and the extent of coverage you are looking to get. So long as you qualify for this type of insurance, you should find no trouble trying to get a policy to protect your investments. The premiums will primarily depend on the risks associated with your property so that the amount will vary from case to case.
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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 insurance in Massachusetts. However, if the property isn’t paid for, your mortgage may require you to have the proper insurance that suits the purpose of the home and property. While rental insurance isn’t required by law, it’s a good way to avoid a significant debt or total loss in the event of a disaster.
As a landlord, you likely need to leave items on the property for routine maintenance. Additionally, more coverage covers the landlord’s personal property. Indeed, common possessions covered by the policy include lawnmowers, garden equipment, tools, and other maintenance equipment. However, your rental 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 Insurance and Investment Properties Insurance Needs in Massachusetts
Our expert independent insurance agents at LoPriore are here 24/7 to help you find the insurance policies that best meet your needs. Instead of trying to sell you policies that you don’t need, our experts work as trusted agents who listen to your story and supply you with the advice you need to make the right decision for your unique needs.
Rental/fire dwelling insurance costs only a percentage more than the traditional homeowner’s insurance and can offer you confidence and peace of mind if an emergency arises. A rental property is a financial investment and an important part of your income. When disaster strikes, rental insurance ensures covers your investments. Click below to get an instant quote and start protecting your rental property today.
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