Landlord Liability Insurance

So, you want to be a landlord. Or perhaps you're already a landlord and need to make sure you've got the right coverage to protect you from liabilities. No matter which category you fall into, being a landlord invites a lot of serious risks that can't be taken lightly, which is what makes having the right landlord liability insurance critical. Having enough landlord insurance is key to keeping your business practices afloat.

Luckily, an independent insurance agent can help you find the right coverage to get the job done. They'll evaluate your coverage needs as a landlord and get you matched to the ideal policy. But first, here's a closer look at landlord liability insurance and how it can work for you.

What Is Landlord Insurance Liability Coverage?

Also called lessor's risk insurance, landlord insurance liability coverage is a way to protect you financially if a tenant or guest sues you for damages. Damages can mean anything from financial strain to emotional harm, physical injury, or even death. If a lawsuit gets filed against you for a tenant's property damage or injury claims, your landlord liability insurance can protect you.

Uninhabitability is also covered by liability insurance, though not under the liability portion of the policy. If a covered event, such as a tree falling and damaging your rental unit, causes your property to be temporarily uninhabitable, landlord insurance can reimburse you for short-term lost rental income. 

Coverage typically extends up to 12 months, but it depends on your policy and insurance company. Times during which you can't rent out your property to tenants due to required repairs and inspections may also be covered by your landlord insurance. This coverage can help you avoid a potentially huge loss of profit.

Is Landlord Liability Insurance the Same As Homeowners Liability Insurance?

No, landlord liability insurance isn't the same as the liability coverage provided by a homeowners insurance policy. If you have a rental property that you allow tenants to rent from you, your homeowners insurance policy won't cover liability related to incidents arising from these tenants. 

A home insurance policy protects you from a liability standpoint if a third party, such as a visitor, delivery person, friend, or another guest sues you for a claim of bodily injury or personal property damage. It won't protect you if you were negligent and found liable for an injured tenant or damaged personal belongings, or cover those lawsuit expenses. 

What Does Landlord Liability Insurance Cover?

Liability insurance for landlords exists to cover your legal expenses. Legal claims can include everything from slips and falls to property damage and break-ins. It can help landlords avoid having to pay for attorney, court, and settlement expenses out-of-pocket.

• Landlord liability insurance: Covers the costs associated with your legal defense, whether or not you're found to be at fault for a claim.

Even with essential maintenance and safety measures, not every liability situation can be prevented. Here are a few liability scenarios for landlords to think about ahead of time:

With so many different potential incidents, having enough landlord liability insurance coverage can help you in many claim situations. You can extend your coverage by enhancing your landlord liability insurance with an umbrella insurance policy. These policies can increase your liability coverage to a limit of $1 million or more.

Liability Landlord Insurance vs. Renters Liability Insurance

Even though it’s not legally required, a landlord may want a tenant to purchase renters insurance as a stipulation in the lease agreement. Renters insurance helps ensure the landlord that if something goes wrong, it will be taken care of. 

But what falls under a tenant’s responsibility and what is the landlord’s? Here are a couple of examples of tenant vs. landlord responsibility:

• Dog bites: Say a guest gets bitten by a dog. That guest can sue the landlord for medical damages, emotional distress, etc. But if the lease agreement states no dogs over 10 pounds are allowed and the one that bit the guest exceeded these terms, the fault would be on the tenant.
• Fights: Say a tenant gets assaulted by someone on the property. The fault might not be on the actual attacker. If the locks on the complex’s main door or another security measure didn’t work properly, the fault would most likely be placed on the landlord.

Knowing a couple of situations in which the landlord could be held responsible for a tenant disaster can help stress the importance of having the right landlord liability insurance to protect against these unexpected lawsuits.

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Do I Need Landlord Liability Insurance?

If you’ve got a loan or mortgage on your commercial property, you probably do need landlord liability insurance. Mortgage lenders often require proof of insurance before issuing a loan. If not, then having coverage isn't technically mandatory. 

No states currently require landlord liability insurance to be purchased by the property owner. But having landlord liability coverage can mean the difference between success and failure to a landlord, because just one lawsuit without this coverage could cause bankruptcy if it's extensive enough.

How Much Landlord Liability Insurance Should I Get?

You need enough landlord liability insurance to protect yourself against an unexpected lawsuit. If a jury decides you could have done more to protect your tenants, you could face financial ruin. 

But even if a lawsuit rules in your favor, just going to court alone can cost you thousands of dollars. Lawsuits and defense costs can be much more expensive than landlord liability insurance premiums. For many landlords, the risk of not having enough coverage outweighs the cost they have to pay to have it.

How Much Does Landlord Liability Insurance Cost?

The cost of landlord liability insurance depends on several factors. These can include the following:

• The type of property you have: A 200-unit multiplex will cost more to insure than a single pool house.
• Your property's location: If your property is located in a major city or a flood zone, it will be more expensive to insure than if it's in the suburbs.
• The use of your property: The cost of your coverage will be considerably less for one or two private tenants vs. an entire commercial complex.

Your independent insurance agent can help you find affordable landlord liability insurance near you. They can also help find any landlord insurance discounts you may be eligible for to help reduce your premium rates even further.

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Our independent agents shop around to find you the best coverage.

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Why Choose an Independent Insurance Agent?

Independent insurance agents simplify the process by shopping and comparing insurance quotes and policy options for you. They have access to multiple landlord insurance companies, so they can find the exact coverage you're looking for at the best rate. Later on, your agent can even file claims for you directly and update your policy as necessary.