An RLI PUP Might be the Solution for the New Short-Term Rental Law

    Posted by MAIA on February 19, 2019

    We know that the new short-term rental law in MA — formally known as the “Act Regulating and Insuring Short-Term Rentals” — has generated many questions from our members. 

    Many have inquired if an RLI Stand-Alone Personal Umbrella Policy (PUP) is a good fit, and the “short” answer is YES! 

    But we know in this industry, the short answer is never enough, so…

    Here’s the longer answer:

    Do you have an insured who rents out their home short-term?

    If YES — Do they meet the following RLI minimum required limits of liability?

    • Primary Residence Only
      Requires Homeowners or Comprehensive Personal Liability of $300,000/occurrence
    • Seasonal, Secondary or Rental Properties
      Require premises liability or Comprehensive Personal Liability of $300,000/occurrence
      Note: Residential properties that are covered under a commercial or other non-personal premises liability policy are excluded from coverage.

    If so, an RLI Stand-Alone Personal Umbrella Policy can extend that liability with additional limits of $1M, $2M, $3M, or $5M – based on underwriting & eligibility.

    If you have an insured in the MA FAIR Plan with only $500,000 Personal Liability, we’d suggest securing, at minimum, another $1M policy with RLI.

    Looking for the “Technical Details”?

    Below are a few excerpts from the current RLI PUP policy form:


    PART II – WHO IS COVERED

    A. For Occurrences not involving motorized vehicles or Watercraft:
    1. You and your Relatives are covered.
    2. Any person or organization legally responsible for your or a Relative's animals is covered if:
      1. the Occurrence arises out of the custody of the animal by that person or organization;
      2. their custody of such animal is with your or a Relative's consent; and
      3. the custody is not in the course of any Business of such person or organization; and
      4. they are covered under the Basic Policies for Occurrences involving your or a Relative's
    3. A trust or any other person or legal entity, in addition to those described above, who is covered as an insured for liability under your Basic Policies is covered for such Occurrence.

    RLI’s Definitions of . . .

    Insured Location means a one to four family dwelling, a condominium, a townhouse or a one to two family mobile home that is owned or occupied by you, including any primary, secondary or seasonal dwelling, as well as the other related, private structures and grounds at that location.

    Injury means Bodily Injury, Personal Injury or Property Damage.

    Basic Policy or Basic Policies means a policy or policies listed in the Declarations (including renewals, temporary replacements for non-owned Automobiles, or endorsements) which provides primary liability coverage. Basic Policy or Basic Policies does not include a commercial or business general liability policy or other non-personal premises liability policy.


    Business Exclusion Carves Back in an Insured Location

    Injury caused by, resulting from, arising out of or in any way connected with Business pursuits or Business Property, unless arising from an Insured Location and only if the Injury is covered by a valid and collectible Basic Policy for the full Minimum Limits of Coverage listed in the Declarations. However, this Exclusion (A.) does not apply to Injury arising from activities occurring on a farm or ranch which are personal rather than Business in nature.


    PART III – WHAT WE WILL DO

    We will pay an amount that anyone covered by this policy becomes legally liable for Injury to which this insurance applies due to an Occurrence which takes place during the Policy Period and in the Policy Territory. This insurance applies:

    A. as excess insurance over and above the greater of:
    1. The Minimum Limit of Coverage as stated in the Declarations which is required to be provided by the Basic Policies; or
    2. The actual Limit of Coverage provided by the Basic Policies if such actual limit is greater than the Minimum Limit of Coverage as stated in the Declarations.
    B. If Injury is not covered under the applicable Basic Policies and coverage is afforded under this policy, to the extent such amount exceeds the Self-Insured Retention amount stated in the Declarations.

     

    Long Story Short

    We can tell you what RLI does cover, but we can’t confirm that this will respond to all of the legal interpretations of the new MA law. 

    Disclaimer:  Every claim is unique and would undergo carrier review.  Based on that review, established policy exclusions and legal requirements of the policy language, coverage would be determined.

    RLI offers one of the few stand-alone personal umbrella policies available. As an MAIA member, you have access to RLI PUPs for your Massachusetts and New Hampshire clients through MAIA’s Number One Insurance Agency. Visit our RLI Personal Umbrella webpage to get started with an Application.

    To learn more or ask questions about RLI, contact Program Manager Angelina Coelho. Her direct line at Number One is (508) 634-7360 and her email is acoelho@massagent.com

    Topics: The Massachusetts Agent, Number One

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