Homeowners vs. Landlord Insurance in Massachusetts

Homeowners insurance and landlord insurance both protect residential property, but they are designed for different situations. Homeowners insurance is generally intended for a home you occupy, while landlord insurance is designed for property rented to tenants. Using the wrong type of policy could leave important losses or liability exposures uncovered.

If you are moving out of your home, purchasing an investment property, adding a rental unit or considering a short-term rental, it is important to review your insurance before a tenant moves in.

Homeowners Insurance Versus Landlord Insurance at a Glance

Coverage consideration	Homeowners insurance	Landlord insurance
Primary purpose	Protects an owner-occupied home	Protects a tenant-occupied rental property
Building coverage	Typically included	Typically included
Owner’s belongings	Broad personal-property coverage may be included	Usually limited to property used to maintain or operate the rental
Tenant’s belongings	Not covered	Not covered
Personal liability	Designed around homeowner risks	Designed around rental-property ownership risks
Loss of use	May cover the homeowner’s additional living expenses	May cover lost rental income after a covered loss
Regular rental activity	May be limited or excluded	Specifically designed for rental exposure
Policyholder occupancy	Owner generally lives in the home	Owner generally does not occupy the rented unit

The exact protection depends on the carrier, policy form, endorsements, exclusions and how the property is used. The most important first step is accurately telling the insurance company who occupies the property and whether rent is being collected.

What Does Homeowners Insurance Cover?

Homeowners insurance is normally written for a house that serves as the policyholder’s primary residence. A standard policy may provide several important forms of protection.

The home itself

Dwelling coverage can help pay to repair or rebuild the house after damage caused by a covered event, such as a fire, windstorm or another peril listed in the policy.

The coverage limit should reflect the estimated cost of rebuilding the home—not necessarily its market value or the amount paid for the property. Massachusetts homeowners should periodically review the dwelling limit shown on the policy’s declarations page, particularly after renovations or increases in construction costs.

Personal belongings

A homeowners policy may cover furniture, clothing, electronics and other personal property owned by members of the household. Coverage limits and exclusions can apply to jewelry, collectibles, artwork, business property and other valuable items.

Personal liability

Liability coverage may help if the homeowner is legally responsible for another person’s injury or property damage. It may also help with legal defense costs, subject to the policy’s terms and limits.

Additional living expenses

When a covered loss makes the home temporarily uninhabitable, the policy may help with additional living expenses, such as temporary lodging and certain increased meal costs.

The Massachusetts Division of Insurance guide to understanding home insurance provides more information about common home insurance coverages and policy terminology.

Property owners looking for homeowners insurance in Massachusetts can also speak with Banas & Fickert Insurance Agency about dwelling limits, liability protection, deductibles and optional coverages that may be relevant to their homes.

What Is Landlord Insurance?

Landlord insurance—sometimes referred to as rental dwelling or dwelling fire insurance—is designed for a residential property that is rented to tenants.

Although landlord and homeowners policies can both cover a residential structure, landlord insurance accounts for risks that arise when the policyholder does not occupy the property as a traditional homeowner.

A landlord policy may include coverage for the following areas.

The rental building

Landlord insurance may cover physical damage to the house or rental building caused by covered events such as fire, wind, hail or other listed perils.

Coverage can vary considerably between policy forms. A basic dwelling fire policy may provide narrower protection than a more comprehensive landlord policy, so property owners should not assume that every rental policy covers the same events.

Landlord-owned property

A landlord policy may cover certain items that remain at the property for tenant use or property maintenance. Examples may include appliances, lawn equipment or other property owned by the landlord.

It is not intended to insure the tenant’s furniture, clothing, electronics or other belongings.

Premises liability

Landlord liability coverage may help when the property owner is found legally responsible for an injury or property damage connected to the rental premises.

Examples might include a tenant or visitor being injured on an unsafe staircase, icy walkway or another hazardous area. Whether a particular incident is covered depends on the facts of the claim and the terms of the policy.

Loss of rental income

Some landlord policies provide loss-of-rents or fair-rental-value coverage. This may replace rental income when a covered loss makes the property uninhabitable while repairs are completed.

This protection generally applies only when the underlying property damage is covered. It does not normally reimburse a landlord because a tenant stops paying rent, breaks a lease or leaves the property vacant.

The Insurance Information Institute’s guidance on insurance coverage when renting out a home explains that long-term rentals and regularly rented investment properties will likely require a landlord or rental dwelling policy.

Why Homeowners Insurance May Not Be Enough for a Rental Property

A homeowners policy is priced and written based partly on the assumption that the owner occupies the home. Renting the property changes how it is used and may introduce different risks.

Tenants may not notice or report maintenance issues as quickly as an owner. The property could also experience more frequent turnover, periods of vacancy or increased liability exposure from tenants and their guests.

Because of these differences, a standard homeowners policy may limit or exclude losses connected to regular rental activity.

A claim could become more complicated when the insurer was told that the property was owner-occupied but later discovers that it was being rented. Property owners should contact their insurance agent before changing the occupancy or use of a home.

When Should You Consider Changing to Landlord Insurance?

A landlord or rental dwelling policy may be appropriate when:

You move out of your current home and rent it to tenants.
You purchase a single-family home as an investment property.
You rent a condominium or townhouse that you own.
You own a two-family or multifamily property and rent one or more units.
You convert a house that was previously owner-occupied into a full-time rental.
You regularly rent a vacation home or second home.
You build or convert an accessory dwelling unit that will be rented.
You begin offering a property as a regular short-term rental.

The correct policy may depend on whether you still occupy part of the property. For example, an owner-occupied two-family home may be insured differently from a two-family building in which both units are rented to tenants.

Banas & Fickert offers several personal property insurance options, including homeowners, dwelling fire, vacant-property, flood, condo and umbrella insurance. An agent can review how the property is occupied and help determine which policy category may be appropriate.

What If You Rent Only One Room or One Unit?

Renting part of an owner-occupied home does not always require replacing the entire homeowners policy, but the rental arrangement still needs to be disclosed.

The insurer may allow the arrangement under the existing policy, require an endorsement or recommend a different policy form. Relevant factors may include:

Whether the rental is short-term or long-term
How many rooms or units are rented
Whether the property has a separate entrance
Whether meals or other services are provided
How frequently tenants or guests change
Whether the owner continues to occupy the property

Do not assume that occasional or partial rental activity is automatically covered. Review the arrangement with the insurance agency before advertising the unit or signing a lease.

What About Short-Term Rentals in Massachusetts?

Short-term rentals require special attention because they may involve frequent guests and may be treated differently from a traditional long-term tenancy.

Massachusetts requires operators of covered short-term rentals to maintain at least $1 million in liability insurance for each short-term rental. A hosting platform may provide qualifying coverage, but the property owner should confirm the platform’s terms, limits and exclusions instead of assuming that all losses are protected.

The Massachusetts short-term rental insurance requirements explain the liability requirement and when coverage supplied by a hosting platform may satisfy it.

Coverage provided by a booking platform should not automatically be treated as a replacement for a properly structured property policy. The building, the owner’s property, loss of income and other exposures may still need separate protection.

Does Landlord Insurance Cover a Tenant’s Belongings?

No. A landlord policy generally protects the building and the landlord’s financial interest in the property. It does not insure the tenant’s furniture, clothing, electronics or other personal belongings.

Tenants need their own renters insurance for personal property and personal liability protection. Renters insurance may also provide additional living-expense coverage if a covered loss makes the rental unit temporarily uninhabitable.

The Massachusetts Division of Insurance explains that renters insurance commonly includes personal-property and liability coverage. Property owners may want to encourage tenants to review Massachusetts renters insurance information before moving into a rental unit.

Requiring renters insurance may also reduce confusion after a loss. However, landlords should ensure that any insurance requirement is clearly stated in the lease and complies with applicable laws.

Does Either Policy Cover Flooding?

Most homeowners and landlord policies do not cover flooding caused by rising surface water. A separate flood insurance policy may be needed to protect the building and, when applicable, its contents.

Flood risk is not limited to coastal properties or officially designated high-risk flood zones. Heavy rain, overflowing waterways, snowmelt and drainage problems can cause flooding in many communities.

The federal National Flood Insurance Program’s flood coverage information explains that most homeowners insurance does not cover flood damage and provides information about building and contents coverage.

Property owners should also distinguish flooding from other kinds of water damage. A burst pipe, sewer backup and rising groundwater can be treated differently under an insurance policy.

Should Landlords Consider Umbrella Insurance?

Rental-property ownership can increase a person’s liability exposure. A serious injury at a rental property could result in medical expenses, legal costs or a lawsuit that exceeds the liability limit of the underlying landlord policy.

Umbrella or excess liability insurance may provide additional coverage after the applicable underlying policy limit has been exhausted. The Massachusetts Division of Insurance specifically identifies owning rental properties as one reason a person may consider additional liability protection.

Property owners can review the state’s guidance on personal umbrella and excess liability insurance to better understand how this additional layer of protection works.

An umbrella policy has its own requirements, exclusions and minimum underlying limits. It is important to confirm that the rental property and landlord policy are properly listed.

Common Property-Use Scenarios

You are buying a home and plan to live there

A homeowners policy will generally be the appropriate starting point. The policy should reflect the home’s characteristics, rebuilding cost, occupants and any additional exposures.

You are moving but keeping your old house as a rental

Notify the insurance agency before the tenant moves in. The existing homeowners policy may need to be replaced with landlord or rental dwelling coverage.

You own a two-family home and live in one unit

The correct policy will depend on the building, occupancy arrangement and carrier guidelines. Make sure the insurer knows that one unit is rented.

You are purchasing a property that needs renovations before tenants move in

A standard landlord policy may not be appropriate during major construction or an extended vacancy. Vacant-property, renovation or builders-risk coverage may need to be considered.

You occasionally rent your primary home to guests

Some insurers may allow limited short-term rental activity, possibly with an endorsement. Regular or frequent rentals may require a different insurance arrangement.

You are converting an accessory dwelling unit into a rental

The property’s replacement cost, liability exposure, use and rental income should be reviewed. Massachusetts insurance guidance notes that a rented ADU may require landlord coverage that addresses property damage, liability and loss of rental income.

Questions to Ask Before Insuring a Rental Property

Before requesting a quote, be prepared to discuss:

Is the property owner-occupied, tenant-occupied or vacant?
Is the rental short-term, seasonal or long-term?
How many units does the building contain?
Are any units currently being renovated?
What appliances or furnishings belong to the landlord?
Are there detached garages, sheds or other structures?
Does the property have a swimming pool, trampoline or other liability exposures?
Is the property located in or near a flood-prone area?
How much rental income would be lost after a major covered claim?
Will tenants be required to maintain renters insurance?
Are current liability limits sufficient to protect the owner’s assets?

Accurate information helps the insurance agency recommend a policy that reflects how the property is actually used.

Review Your Coverage Before Renting Your Property

Changing a home into a rental property is more than a change of address. It changes the property’s occupancy, liability exposure and purpose—and the insurance should reflect those changes.

Banas & Fickert Insurance Agency works with property owners in Easthampton and throughout Western Massachusetts. Our agents take the time to discuss your property, explain your options and help you understand what a proposed policy does and does not cover.

Whether you are buying your first rental property, moving out of a home you plan to keep or reviewing insurance on an existing investment property, request a complimentary insurance review or call 413-527-2700.

Do not wait until a tenant moves in or a claim occurs to discover that the property was insured under the wrong type of policy. Contact Banas & Fickert Insurance Agency to discuss homeowners and landlord insurance options for your Massachusetts property.

This article provides general insurance information and is not a statement of coverage. Policy terms, conditions, exclusions and eligibility requirements vary by insurance company and individual risk. Coverage cannot be confirmed or changed without authorization from the insurance carrier.