Landlord Insurance in Massachusetts

What kinds of residential properties can landlord policies insure?

Landlord policies are primarily intended for smaller residential properties, especially those that have fewer than five units. This may be a good option if insuring a single-family house, condominium, townhouse, duplex, triplex, or quadplex.

Once landlords get into larger multifamily housing properties, a different insurance policy with additional protections is usually preferable. A different policy is usually also needed if insuring a mixed-use building, which has residential and other spaces.

What protections are included in landlord policies?

These policies typically come with both property coverage and landlord liability insurance coverage. Landlords may also choose to include coverages that help safeguard their income stream. 

The following are some examples of the various coverages that these policies might make available, either as standard or optional features:

• Property Damage Insurance: Normally covers damage to the rental property itself, and often also HVAC systems, appliances, yard equipment, furniture, etc.
• General Landlord Liability Insurance: Normally covers lawsuits filed by tenants, or others, who are injured while at a rental property.
• Commercial Umbrella Insurance: Normally covers costly liability lawsuits with an extra layer of landlord liability protection.
• Rent Guarantee Insurance: Normally covers income loss that’s the result of tenants failing to pay their due rent.
• Loss of Rental Income Insurance: Normally covers income loss that’s the result of a disaster rendering a property temporarily unusable.
• Legal Assistance Insurance: Normally helps with legal fees that don’t stem from liability lawsuits, such as fees incurred when pursuing evictions or judgments.

Should landlords get rent guarantee insurance?

Rent guarantee insurance certainly can be helpful if rents go unpaid. Whether landlords should include this in their policy depends on their situation, however.

Rent guarantee coverage is sometimes required if the rental property is financed. Lenders want to be sure that their loans can be repaid, and this coverage might help ensure landlords can pay even if tenants don’t.

The coverage also may make sense if a landlord needs the rental income to cover their own living expenses. If a couple of months of unpaid rent would cause significant short-term hardship for a landlord or their family, then this coverage is probably advisable.

Landlords who use their rental properties only as long-term investments may not need this coverage. A rent guarantee normally isn’t’ as crucial if the rent isn’t needed to make a loan payment, and also isn’t immediately needed to cover living expenses.

An insurance agent who understands landlords’ insurance needs well can help think through the decision process, and ultimately determine whether this coverage makes sense for a particular property.

Does home insurance cover liability lawsuits tenants might file?

Standard home insurance policies usually don’t cover liability lawsuits filed by tenants against a landlord. Although they might cover liability lawsuits in other situations, those related to a rental property are highly unlikely to be covered by home insurance.

Instead, landlord liability insurance is normally needed to protect against lawsuits that tenants could file.