Looking for Landlord insurance + eviction, and malicious tenant damage coverage

Boston, Massachusetts
Insurance
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Looking for Landlord insurance + eviction, and malicious tenant damage coverage

Sean Leonard
Member since 2022 · 11 posts · 5 votes

I own a single family ranch house in Massachusetts, just north of Boston. We had a fire/landlord policy with Norfolk and Dedham insurance, however after my last tenant and last property manager allowed my property to get into a state of severe disrepair, including water damage from a dishwasher/septic backup, which was never remediated, my insurer dropped me from coverage as a "bad risk" (we had made a claim for the water damage by the tenant).

So in this current economic environment, a "bad risk" is anyone that makes a claim against an insurance policy.

The damages have been remediated, the interior of the home has been rehabbed, including a complete kitchen makeover.

My insurance agent had difficulty finding me a replacement policy, given that the property was untenanted, and undergoing construction. She found me a policy that would cover the property for 2-3 months for $1500.00. Given our financial constraints at the time, we couldn't afford such a high sum for limited coverage.

I'm told that the lapse in coverage for the few months between being dropped by our previous insurer and attempting to get a landlord/investment property policy will make if VERY difficult to get a policy.

I'm not sure that my agent really has much experience in insuring investment properties/rental properties.

I reached out to Arcana (now MSI, and they forwarded my a list of agents/reps that could work with me.

My question is: Are there any other places I should be looking to obtain coverage?

--Sean

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  • Michael Norris
    Specialist · Strongsville, OH · Member since 2016 · 303 posts · 217 votes
    2y

    The entire property & casualty market is a mess at the moment with carriers being unprofitable across the board and many becoming insolvent or shutting down in states where they were least profitable and/or were not allowed to take the rate increases they were asking for (rate increases have to be approved by each states dept of insurance they don't just get to jack the rates up because they want to)

    If you are in a REIA reach out to some of the players there and see who they recommend. Most people suggest finding an independent agent who can shop multiple carriers as the best option and that is a good idea also but know that some Indy agent's don't want investor business so I'll say it simply Indy's are great but not all Indy's want your business.

    Having a prior claim within the last 24-36 months is a red flag / non-starter for many carriers at the moment especially for water leaks.

    I advise all my clients do not play go fish with the insurance companies right now unless you 1. Have a claim damage estimate before filing the claim that is well above your deductible amount 2. Are very confident it will be covered 3. the amount paid out will be worth it. If you have multiple properties your rates may be increased or you may be dropped because of the claim or you may not be able to get a new policy from that carrier for many years.

    I can't stress enough how much of a mess the insurance market is... think about it this way.

    Imagine 95% of the primary home mortgages in the US were unprofitable for the banks that issued the loans - how easy would it be to get a new loan?

    Answer: you would NOT be able to get a loan, period, the banks would shut down lending so fast your head would spin until Uncle Sam comes along and bails them out (again). 

    The insurance industry isn't as lucky as the banks but fortunately operates on reserves so they have not shut the world down (yet) like the banks would have if they were losing money this way - but the losses have gone on too long so now we all pay the piper one way or another. Buckle up this will probably last another 2 - 3 years.

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  • Sean Leonard
    OP
    Member since 2022 · 11 posts · 5 votes
    2y

    @Michael Norris, Yeah. I've seen news reports of the same, especially in California.

    I reached out to Arcana (now MSI) as they are recommended by a number of threads I've seen on Bigger Pockets...They don't deal with customers directly, but did offer a list of agents/companies that will. I managed to get one quote, for $4000.00 per anum. I assume this is competitive but will continue to seek a few more quotes...

    --Sean

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