What is landlord insurance? How coverage could play into a squatter situation

Landlord insurance typically doesn't cover costs accrued in a squatter situation. Proper Insurance, which offers short-term rental insurance, created a unique type of coverage coming out of the COVID pandemic, that is specifically designated to protect property owners in a situation where a renter refuses to leave the property once their lease has ended. 

When an individual decides to turn one of their properties into a rental, they need insurance apart from homeowners insurance. 

Landlord insurance traditionally covers things like property damage, lost rental income if something is to happen to the property that makes it uninhabitable and liability protection, according to Investopedia. 

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Additional typical coverage options include flood insurance, emergency coverage, guaranteed income insurance and additional construction expenses.

One type of coverage that does not often fall under the landlord insurance umbrella is squatter coverage. 

Squatter situations can cause huge expenses to fall on the shoulders of property owners. 

"One issue with squatting, particularly, is that squatters come with property damage," Nick Massey, director of sales, Proper Insurance told Fox News Digital in a phone call. 

Proper Insurance's squatter coverage covers legal expenses and loss of revenue that could come from a squatter, and also property damage that is caused, according to Massey. 

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This type of coverage is not widely available, with a good number of insurance policies coming with "an exclusion around property entrustment," Massey said, which means that when someone is let into a home, and then vandalizes that property, the insurance company is not going to cover those costs, he explained. 

Proper Insurance's coverage is unique to those renting out on a short- and mid-term basis. 

"A little over 10 years ago, our ownership team set out to create an insurance policy designed for the modern property investor," Massey told Fox News Digital. 

The squatter coverage came into play during the COVID pandemic, when vacations were widely halted, and homeowners allowed longer stays in their rental units. 

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"Fast forward into the COVID pandemic, short-term rentals are more or less shut down across the country," Massey said. "Nobody's really traveling, but we start to see the movement of intrastate travel from people out of the metros into short-term rental homes, kind of more remote for these longer term stays, and these stays being 30-, 45-, 60-, sometimes 90-day terms that these folks are staying at these properties." 

Those homeowners who went from short-term rentals to longer-term arrangements echoed similar concerns, Massey said. 

"What if they don’t leave?" 

"We immediately responded to that question by creating a new coverage that has never been done before, ever, anywhere, with our squatter protection," Massey said. 

Squatter protection, which comes at an additional premium, can be used in those situations where a renter signs a lease, the lease comes to a close, and then the person refuses to leave the property. 

"[It was created] to allow some more flexibility and peace of mind for these folks who are going to take longer-term stays," Massey explained. 

Out of the COVID pandemic also came "a new industry called mid-term rentals," Massey told Fox News Digital. 

"So we have short-term, long-term, and now we have mid-term rentals, which primarily curates to traveling nurses . . . mostly the medical professional field, but these homeowners are taking that as an opportunity to house these folks in their property, but they stay longer term. In most states . . . you become a squatter if you're there 29 days or more, depending on the state," Massey said. "We're able to provide an additional layer of protection for them in the event of a squatting situation."