What is Rental Property Insurance?
Landlords in Massachusetts have a lot invested in the buildings that they rent out, and their investment should be protected. Rental property insurance helps landlords protect both their buildings and themselves from a range of potential risks.
Rental property insurance is a specialized insurance that’s uniquely designed to meet landlords’ needs. While rental property policies may be similar to other kinds of property insurance in some ways, there also are important differences between rental property and other insurances.
Who in Massachusetts Needs Rental Property Coverage?Most Massachusetts residents and businesses that have investment properties should protect those properties with a rental property policy. In many cases, landlords who have loans on their properties may be required by the terms of their loan to carry a minimum amount of coverage. Even without such a requirement, however, landlords are generally wise to insure their property against potential loss.
What Coverages Do Rental Property Policies Provide?
Most rental property policies offer some form of property coverage and some liability coverage. In addition to these two primary protections, policies might offer a number of additional protections.
Rental property coverage generally protects an investment property against covered causes of damage or loss. For example, a policy might insure a building against fire, wind, hail, burglary, lightning and similar risks. Exactly what is covered and whether those protections are extended to secondary structures (e.g. fences, separate storage units or detached garages) depends on a policy’s particular terms and conditions.
Liability coverage normally helps shield the policyholder from certain liability lawsuits that could be filed against them. Coverage is typically limited to situations related to the property and/or its rental. For example, a tenant who slipped in an icy parking lot might file a covered suit.
The other protections that policies may make available protect landlords in a variety of ways:
- Rent Guarantee Coverage may offer payments if a tenant doesn’t pay their rent
- Landlord Contents Coverage may protect landlord-owned equipment in a building
- Legal Assistance Coverage may cover legal fees associated with non-liability lawsuits
- Loss of Income Coverage may offer payments if a covered incident reduces revenue
These are just some of the many different coverages that rental property policies might offer as optional protections.
For help exploring all the various coverage options, landlords should contact an insurance agent who’s familiar with the different options offered by rental property policies. A knowledgeable agent will be able to make informed recommendations based on their experience helping other landlords.
Do Rental Property Policies Cover Tenants?
Rental property policies usually cover only landlords and the buildings that they own. Coverage normally isn’t extended to tenants.
Tenants who want insurance typically purchase their own renters insurance or an appropriate commercial insurance (depending on whether they’re renting a residential or commercial space). In some situations, landlords might require tenants to carry renters or other insurance. If such a stipulation is made, it’s frequently written into the lease.
How Much Do Rental Property Policies Cost?
As is true with most types of insurance, the cost of rental property policies can vary. Some of the items that may influence how much a landlord must pay for insurance include the following:
- Whether a building is zoned residential, commercial or mixed-use
- Where a building is located and how far a fire department is from the building
- How many units a building has and how large the building itself is
- How many claims a landlord has previously filed and what coverages they select