In short, landlord insurance covers things that do not get covered in regular homeowner’s insurance. One hurdle that many homeowners run into sooner or later is finding the right insurance policy for their property. A general theme is that on the whole, landlord insurance is roughly 15% more expensive than homeowner’s insurance. This is simply because of the assumption of risk associated with renting out properties to prospective tenants. Now while this may deter a homeowner from seriously considering landlord insurance, it is this way for a reason.

When it comes to insurance for landlords, there are three boxes you want to make sure are checked off in a policy; property damage, lost rental and liability protection clauses. Property damage is a bit of an obvious one. There is no telling what may or may not happen during the duration of a potential lease be it a natural disaster, broken appliance, or tenant irresponsibility. This is an essential piece of landlord insurance as even with responsible and respectful tenants, there is always a possibility of an unforeseen problem. An important note to take is to make sure your policy has replacement cost instead of actual cash value, especially with older fixtures and or appliances. A Lost rental clause is another vital piece of insurance that should be included in any policy. While this not only covers the vacancy of your property, a good policy will cover losses in the event of a tenant being short on rent or failing to pay at all. The third and potentially most important coverage option a good policy has is liability protection. This clause will protect the landlord from possible injuries sustained by a tenant as a result of a property maintenance issue. While this aspect of the policy might seem least likely to take effect, it is potentially the most expensive should something happen. In our opinion, it is crucial to have this protection, as many homes in Massachusetts are very old and falling apart to some degree. Also, this covers the landlord from any liability related to injury from harsh winter conditions, which in New England, is a distinct possibility. As with most insurance policies, there are additional riders that can supplement your coverage such as fire and flood protection. These are important to consider if the homeowner feels they are more susceptible to such potential dangers. Another aspect to consider is that it is important to keep tenants renting your property because insurance premiums will increase for landlords whose tenants are not renting for longer periods of time. The thought here is that short-term renters are less likely to report or notice issues with the property making it more likely a costly repair is around the corner. One small caveat to landlord insurance is that it will not cover the possessions of your tenants so it is wise to express to them that renters insurance is a viable option. 

As always, the ideal situation to shoot for is the protection of both the landlord and the tenant while both parties are also well informed on what they are and are not liable for. Insurance in all fields can seem taxing and in some regards unneeded but it is always the safe route to take and when it comes to your money and the safety of the community, there is no substitute for wise decision making. 

Cited sources:

Investopedia.com  “A quick guide to landlord Insurance”

Nationwide.com “What You Need to Know About Landlord Insurance”