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Landlord Liability Insurance
If these troubling times have taught us anything, it’s that the real estate market goes through cycles. Just like most other investments, there is an inherent risk when purchasing property. However, regardless of the shape that the market is in, there will always be people looking to rent. As an apartment building(s) owner and/or lessor, you may count on these properties as a steady source or primary or supplemental income. While you may have traditional insurance in place to cover possible problems to the buildings themselves, there is the often overlooked problem of what is protecting you, which is why it’s important to make sure you have a custom apartment owner liability insurance cover plan to fill in these gaps. If an accident or injury takes place in one of your properties, there is a distinct possibility that the tenant will try to hold you personally responsible. Or if you have tenants with high risk dogs, you might need animal liability protection in the event there’s an attack – a lawsuit of this nature could end up costing you greatly.
Apartment liability insurance plans are molded to suit your specific needs (size of building, number of property, number of tenants, location, etc), and as accurately and efficiently as possible. It would be unfortunate in this down economy, when times are already tough, to be solely up against any kind of lawsuit, along with the lawyer fees, time, and stress that come with it. By finding a custom liability plan, you’ll fill in the gaps of your traditional plan, and you’ll lessen the chance of an accident taking a large bite out of the income you’ve come to count on.
Landlord Liability Insurance
Although owning a rental property can be rewarding, it could also be risky. Say your tenant slips and falls after the common area floors have been mopped. Suppose your property has faulty security and an intruder breaks in, or the ceiling collapses above your tenant’s head. You’re looking at a costly lawsuit.
Case in point: a New York City woman sued and won the case against her landlord after he neglected to fix the ceiling in her bedroom that collapsed on her head while she was sleeping. Another example — a landlord neglected to investigate and discover an electrical defect that caused a fire that destroyed his tenant’s home and belongs. The tenant was awarded a $500,000 settlement. In another case, a Marin County man sued his landlord after falling down the stairs and was awarded $1.1 million by a jury.
What Every Landlord Should Know About Insurance
Owning property carries a fair amount of risk. The factors that make you, the landlord, the most vulnerable are, damage to property either by tenant or disaster, and lawsuits. Many landlords depend on the income from rental properties to make payments on their current residence so it is important to protect yourself so that you are not without this income.
Here are some facts you should consider when choosing landlord insurance coverage.
Not all policies are equal– This is one of those categories where you get what you pay for. XINSURANCE will consider the type of property you own and customize coverage, premiums, deductibles and financing to suit your specific needs.
Insurance can help you pay for repairs– As a landlord, you should be protected against extensive property damage. Whether damage is deliberate from disgruntled tenants, or due to tenants who don’t take good care of the property, or by fires, floods, earthquakes, violent storms, etc. your property could end up uninhabitable until repairs are made. The right insurance policy can protect you in these situations.
Insurance can protect against lost rent or late rent–When a tenant is evicted or when the property can’t be rented because of damage, you stand to lose significant income. Having an insurance policy in place can prevent you from adding loss of rent to the stresses of managing a property.
Insurance can protect you from theft on the property–An appropriate policy can help pay for items such as appliances or light fixtures that may be stolen.
An insurance policy can cover you from accidents that occur on the property– If an accident occurs on your property, you may be responsible for medical bills. You need protection from potentially hazardous conditions on the property like loose steps, a shaky handrail, constantly icy walkway, etc.
Landlord insurance will not cover damage or injury due to negligence of the landlord. The landlord must keep the property in good condition.
Renter’s Insurance: The Good, the Bad, and The Ugly
Most people consider insurance when it comes to their car or their house because it’s required in order to get a loan. But renter’s insurance is another thing. Many renters live under misconceptions about the need for insurance. For example, some believe that the landlord’s insurance will cover them in case of theft, or their roommate’s insurance will include them, or that they are still covered under their parents’ homeowners insurance. The truth is, in order to protect your belongings you must get coverage for them yourself.
The question is, why is renter’s insurance worth it, and how far will its coverage reach? Renter’s insurance covers you in case of theft, or damage from situations like floods, winds, or hailstorms. You choose your coverage to be either replacement cost coverage (covers the cost of purchasing damaged items new) or cash-value coverage (covers the cost of the item damaged, usually not enough to buy it again new). Additionally, renters insurance can be included to cover liabilities like a visitor who gets hurt while on your property.
But, there are some things that your renters’ insurance may not cover. In these cases, you need to consider supplemental liability coverage. XINSURANCE offers additional liability insurance solutions to supplement your renter’s insurance.
Examples of common exclusions from renter’s insurance (depending upon the area in which you live) are earthquakes, floods, power failure, neglect, war, intentional acts, and nuclear hazards. Additionally, if your townhouse or apartment or condominium sustains major damage from a covered event and your possessions are severely compromised, your ability to make a claim against your loss will still be limited based on the amount of coverage you have elected as a policyholder.
The Liability Side of Renting Part of Your Home
The main reason people rent out part of their home, such as a room or an entire floor, is the need for extra income. These landlords are retirees, single parents, people with disabilities who can’t work, and people who use the income to offset mortgage payments. If the homeowner lives in an area considered desirable, then rents will generally increase each year, which makes renting yet more lucrative. However, with gaps in homeowners insurance, you may want to consider a personal liability insurance policy to protect your assets.
If the homeowner doesn’t mind lots of short-term tenants, she or he can engage in home-sharing. This involves renting a room or rooms to people visiting the area. They could be vacationers, business travelers, or anyone inclined to travel. Online platforms such as VRBO, Airbnb, and HomeAway do the hard work of finding and vetting tenants. Travelers wanting a change from the hotel experience and cheaper accommodations also benefit.
As attractive as renting your home seems, there are downsides. An important one is the liability risks of being a landlord. If you intend to rent out part of your home as an ongoing business activity, you will need landlord insurance. If this is an occasional activity, especially if you’re engaged in home-sharing where getting some quick cash with short-term tenants is easy, then paying ongoing landlord insurance premiums is less viable. Can you rely on your homeowners’ liability coverage? Unfortunately, most insurers will regard home-sharing as a business activity and will exclude it from their coverage.
This leaves you exposed to lawsuits arising from failing to provide safe housing in good repair. Maintenance issues you’re normally relaxed about can potentially expose you to litigation. For example, you will have to keep porch steps, sidewalks, and your driveway clear of snow and ice.
Something as simple as a burnt-out porch light combined with a patch of frozen water on the porch can cause an injury and lawsuit. A small plumbing leak can within a few days, start a mold infestation and make the tenant sick or have a severe allergy attack. These are just two of many plausible scenarios.
Why Renting to Dog Owners Could Cost You Everything
If you haven’t seen it, a stunning opinion issued by the Kentucky Supreme Court in recent news stated that landlords could be held liable if their tenants’ dog bites someone. Now, instead of simply weighing the usual wear-and-tear costs associated with allowing dogs in rental units, landlords will need to determine whether renting to dog owners could put their very livelihood at stake.
Jeffrey Greenberger, attorney for the Greater Cincinnati Northern Kentucky Apartment Association, responded to the opinion by calling it “scary.” He added he “knows of no other case where the landlord is treated as though he owns the tenant’s pet.”
With important court decisions such as these being made against landlords, it’s important to be proactive in how we approach possible tenants. In an analysis of the opinion on LawReader.com, the following suggestions were made to landlords in an effort to provide more protection:
- Review and, as needed, revise current lease agreements
- If necessary, adjust property management practices to protect against or avoid liability for tenants’ dogs
- Review current insurance policies and consider supplemental coverage as a way to protect assets in case of a lawsuit
Such opinions as these remind us that, as landlords, we need to be vigilant in planning for the unexpected. Just as traditional home insurance policies will help us combat faulty wiring and bad plumbing, supplemental policies like those offered by XINSURANCE can protect us from litigation when we least expect it.
PS – for landlords who allow animals, go check out our Animal Liability for Landlords page!
Fact is, if you’re a landlord, you need protection against litigation in the event of an accident, injury, or worse. Your best protection is Landlord Liability Insurance from XINSURANCE. XINSURANCE is a DBA of Evolution Insurance Brokers, an insurance brokerage. XINSURANCE provides customized specialty insurance solutions for ever-changing risks and liability issues, including property and casualty insurance — and coverage for landlords.
With over 40 years of underwriting experience, XINSURANCE understands the unique liability risks that landlords face. Our experts can provide you with a wide range of solutions to manage and stay ahead of any risks that could affect your business. If you do need to make a claim, we’re your trusted partner, providing you with a legal defense and covering any damages awarded up to your policy limit.
Our Tenant Legal Liability coverage adds an additional layer of protection to your current coverage — and includes customizable limits of liability for fire, smoke, water damage and additional causes of loss. Now’s the time to protect your financial investment — and help take the risk out of being a landlord. Contact us today to get a quote!
Originally published December 3, 2018 7:21 AM, updated August 04, 2020
Authored by Rick J. Lindsey, President, Chairman, and CEO of XINSURANCE
Rick J. Lindsey hails from Salt Lake City, Utah. He began working in the mailroom of his father’s Salt Lake City insurance firm, getting his introduction to the business that became his lifelong career. Rick J. Lindsey quickly rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick J. Lindsey is highly skilled in all levels of leadership and execution. As he progressed on his career path, Rick J. Lindsey discovered an urgent need for insurers willing to write policies for high-risk individuals and businesses. He was frequently frustrated that he could not provide the liability protection these entities desperately needed to safeguard their assets. He also formed the belief that insurance companies acted too quickly to settle frivolous claims. Rick J. Lindsey decided to try a different approach. He started an insurance company and became the newly formed entity’s CEO. This opportunity has enabled Rick J. Lindsey to fill a void in the market and provide a valuable service to businesses, individuals, and insurance agents who write high-risk business. XINSURANCE also specializes in helping individuals and businesses who live a lifestyle or participate in activities that make them difficult for traditional carriers to insure. If you’ve been denied, non-renewed, or canceled coverage, don’t give up quite yet. Chances are XINSURANCE can help.