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Owning a rental property in Massachusetts is attractive for many reasons, but it also carries many risks. It is not known for being a landlord-friendly state, and the high risk of flooding in many areas poses a threat to all property owners.
Landlord insurance exists to offer some protection in a number of situations, and -although not required by law- is a must-have for anyone who rents out their property or runs a rental business.
Here is everything you need to know about landlord insurance in Massachusetts, what it covers, how much it costs, and why it is so important.
Landlord Insurance and the Rental Market in the US
The current average amount people pay in rent in the US is just under $1,400 per month, but when you include current asking prices, the figure is closer to $2,000. As for landlord insurance policies, the national average cost is roughly $2,100.
None of these figures represent an accurate estimate of what people should expect to collect in rent or pay in rental property insurance- since there are so many variables that significantly impact the amount of each.
What Is Massachusetts Landlord Insurance?
Landlord insurance is a policy that covers the cost of property damage, liability costs, and more for investment property owners who rent to other people. If you have a tenant or plan to look for one, this is usually the type of coverage you need.
In Massachusetts, landlord insurance is not a legal must-have- but it is highly recommended for anyone who does not want to potentially face significant financial challenges alone if their property is damaged.
As well as covering the cost of damage caused by covered events, a landlord insurance policy also covers other risks that come with being in the rental property business that don't affect other homeowners.
Rental property insurance is often required in the terms and conditions of the loan agreement with mortgage lenders, so bear that in mind if you are looking to buy a new investment property.
Landlord Insurance VS Homeowners Insurance
It is easy to confuse landlord insurance and homeowners insurance because of the many crossovers in the types of coverage they provide. However, the two are different, and it is important to pick the right one to secure the right protection for your property.
As a general rule, anyone who rents their properties to others needs landlord insurance. If you live on your own property, homeowners insurance is usually enough.
There are a few coverage options with landlord insurance policies that are not offered in a standard home insurance policy. They also cost a little more on average.
What Does Massachusetts Landlord Insurance Cover?
Massachusetts landlord insurance policies have a base set of coverages that are always included (how much coverage you have depends on your policy terms and conditions) and others that are available as optional add-ons.
Damage to the Structure of Your Property
Dwelling coverage is the term for insurance that pays to repair damage to the property itself. This includes storm damage- but not usually water damage caused by floods. You can add flood insurance or buy a policy through the National Flood Insurance Program.
It is important to have enough dwelling coverage to pay for the complete reconstruction of your property.
Damage to Your Personal Belongings
Landlord insurance covers damage to your belongings that are in the rental property. Personal property coverage only applies to items that belong to the policyholder.
Landlord Liability Coverage
There are two types of landlord liability coverage: medical expenses and legal fees.
Medical liability coverage pays out if someone is injured on your property, and legal liability coverage applies if you end up taking legal action against a tenant.
Lost Income
Rental income coverage pays you the money you lose if your property is uninhabitable due to damage sustained by a covered event. It may also help pay for alternative accommodation for your tenants.
Break-ins and Vandalism by Third Parties
If your property is vandalized or broken into by someone other than your tenant, insurance will generally cover the costs. You can also add theft insurance to most policies.
What Is Not Covered by Landlord Insurance in Massachusetts?
Things like flood insurance, earthquakes, and other specific coverages are not usually included in a standard landlord insurance policy, but you can usually buy extra coverage to extend your protection. Check what potential providers offer before picking a policy.
There are, however, some things that are just not covered.
Intentional or Malicious Damage Caused by Tenants
Tenant damage caused maliciously or intentionally is a case for a lawsuit, not your insurance provider.
Tenants' Personal Belongings
The personal property of your tenants is not included in landlord insurance coverage. That is what rental insurance is for, and you are allowed to require your renters to have their own policy as a condition of the lease agreement.
General Maintenance and Replacing Old Appliances
Wear and tear can lead to broken equipment, but your insurance won't pay to replace it. Landlords in Massachusetts are responsible for paying for general maintenance and buying new appliances before they break down.
When and Why Landlord Insurance is Important for Massachusetts Landlords and Rental Property Managers?
Nobody likes to believe that disaster will strike, but the fact of the matter is that it can- and does. Even small events can cause expensive damage. Without landlord insurance, you need to face those bills alone.
Some situations where having landlord insurance in Massachusetts comes in handy include:
- Natural disasters (most notably floods in this state- so make sure you include this in your coverage)
- Tenant disputes (it can cover legal fees during evictions and other legal battles)
- Severe weather (roofs, siding, outdoor structures, and more are vulnerable to damage during heavy storms)
- Break-ins (repairs broken locks, windows, doors, and stolen items if they belong to you)
- Injuries (pays for medical expenses if someone sustains an injury on your property, and you are liable)
- Sudden appliance failures (when faulty HVAC systems or other appliances leak and cause damage)
These are just a few examples- the list goes on. In short, landlord insurance can help you avoid financial disaster in all kinds of situations.
How Much Is Landlord Insurance in Massachusetts?
The cost of landlord insurance is influenced by so many things that it is impossible to put a ballpark figure on what you should expect to pay. You can read more about what goes into calculating your rate below.
Based on data shared by Clovered, these are the average annual landlord insurance cost figures for different property value categories.
- $200,000 value: $1,206
- $300,000 value: $1,811
- $400,000 value: $2,414
Overall, these average figures are slightly lower than many other states- but they should only be viewed as very rough guidelines of what to expect. Your rate could be very different.
How Are Landlord Insurance Costs Calculated?
Insurance companies calculate landlord insurance rates based on the projected cost of completely rebuilding your property and the level of risk they face by insuring it. This is a very basic explanation, but it does sum up, in a nutshell, the thinking behind insurance costs for rental properties in Massachusetts.
Here are a few more details.
- An insurance provider will first consider the type of property you own. Single-family homes, multi-family units, condo units, commercial rental properties, and multi-unit apartments have unique needs.
- Next, the size and value are taken into account. There will most likely be an in-depth inspection of your property to establish its current condition and how much it would cost to rebuild. The inspector also looks for anything that may increase the risks, including rot, mold, faulty appliances, and worn structural elements.
- Geographical risks are also considered. If you are in a more flood-prone area of the state, your rate will likely be higher (as you may want to include flood insurance coverage).
- Your monthly rate also depends on how much coverage you want and how high your deductibles are.
Every company has its own method, but these are some of the things you can be sure will come into play when your Massachusetts landlord insurance rate is being calculated.
Money Saving Tips to Reduce Your Rental Property Insurance Costs
Saving a little money on your insurance premiums is always a good thing, and there are quite a few ways to do it.
Look at the Discounts Offered by Potential Insurance Providers
Many insurance companies operating in Massachusetts offer multiple discounts and savings opportunities. Make sure you look at the options when comparing providers to find the best deals.
Some of the possible discounts include:
- Bundling discounts when you combine landlord insurance with another policy
- Lower price if you pay annually rather than month-to-month
- Rewards for using eco-friendly materials and appliances
- Save money if you have a family member who is already a client
These are just some examples- there are more offers out there than you might think!
Prepare Your Property for Inspection
The property inspection is one of the most important parts of your insurance quote. Resolving any potential risks or issues beforehand is worth your time and money, as it could mean lower premiums.
Consider replacing any old appliances, treating mold or rot, and making sure your roof is in good condition. As a side note, properties with new roofs are almost always insured for less.
Storm Mitigation
Speaking of roofs, you can also save money on your insurance if you take steps to mitigate the risk of storm damage. Reinforced windows, doors, and roofing systems can all reduce your premiums. Depending on where your rental property is, you could also save money by implementing anti-flooding measures.
Think about Increasing Your Deductibles
Your deductible is the amount of money you need to pay out-of-pocket before insurance kicks in. The higher it is, the lower your monthly insurance rates will be, but it means paying more if you need to make a claim.
Screen Tenants to Avoid Certain Risks
High-quality tenants are less likely to cause disputes or contribute to damage- meaning a lower chance of needing to claim. You may not always gain immediate savings, but screening tenants with DoorLoop could mean lower rates over time if you are seen as a low-risk client.
The Five Best Landlord Insurance Companies in Massachusetts
These five insurance companies offer landlord coverage for Massachusetts rental properties. Each one is highly rated with excellent financial stability and could be a good choice for you.
Remember to compare landlord insurance quotes from multiple providers before settling on a landlord insurance policy. It is not just about finding the cheapest landlord insurance- you need a policy that provides adequate coverage limits for your property and includes all the biggest risks in your area.
How Does DoorLoop Help Massachusetts Landlords and Property Managers?
There is more to protecting and improving your property management business than insurance. Daily operations can take up a lot of time and effort, and keeping track of everything can be time-consuming if you don't have an effective solution.
With DoorLoop, all that is taken care of. It offers all the vital tools for managing a property portfolio (big or small), including maintenance requests, online rent payments, tenant screening, and effective marketing. DoorLoop also includes a full suite of accounting tools to help you control your finances and has a tenant portal to consolidate communications and reduce the time you spend answering calls, texts, and emails.
In short, DoorLoop is a one-stop shop for landlords who want the best for their business and need a tool that supports them as they grow in the rental property industry.
DoorLoop offers a free demo where you can see first-hand just how beneficial this comprehensive property management solution can be for your business. Try it today to learn more!
Summary
Rental property insurance is essential, even if it is not required by law. In a state that favors tenants' rights over landlords, it is even more important to be properly protected from damage, liability, and other expenses.
Plenty of reputable companies offer landlord insurance in Massachusetts, and you can usually get free landlord insurance quotes online. Remember to shop around to find the right fit before settling on a landlord policy.
DoorLoop also helps Massachusetts landlords put themselves in a better position by running their businesses efficiently and being ready for everything that comes their way. Make your life easier and keep your tenants happy with this game-changing property management tool.
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