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Landlord Liability Protection: A Compact Guide

Posted On Thursday, 06 January 2022 20:46
Landlord Liability Protection: A Compact Guide

Are you renting out properties such as residential houses, cottages, and apartments? Do you know how to protect it? If not, then you need landlord liability insurance. But first, what is it and why do you need it?

What Is Landlord Liability Insurance?

Being a landlord is one of the excellent ways to earn passive income. While renting out a property seems to give you plenty of wealth, it can also result in problems such as repairs. That’s why you need landlord insurance to protect your properties. However, not all insurance is the same. When applying for one, you should look for a coverage that includes liability and replacement cost value. Usually, the liability coverage is under dwelling policy three.

The primary purpose of liability insurance is to keep your properties insured and financially protected. You may use this insurance if you’re legally responsible for the injuries of your tenants, their guests, and damages to their property.

Why Do You Need A Landlord Liability Insurance?

The most common mistake for most landlords is thinking that the homeowner’s insurance policy will cover all the costs in case of natural disasters or other unfortunate events. But that’s not the case.

The main goal of having landlord liability insurance isn’t only to protect your properties in case of emergencies and disasters, but also to pay for the damages you’ve caused to your tenants. That’s why you need landlord insurance to prepare yourself for accidents that may be inevitable in the future.

What Does The Liability Insurance Cover?

The landlord liability insurance may cover all the costs and damages you’re responsible for such as the tenants, medical fees, and legal fees. It also protects your tenant’s property, especially if you’re found at fault. In short, the insurance will work if you’re found responsible for the damages.

Here are other cases where liability insurance may be used:

  • Faulty railings: If your tenants suffer injuries because of your broken railings, they have the right to sue you for the damages.
  • Damaged pathways: Imagine a case where your tenant trips because of stones that stick out in a dark walkway. If this happens, you may be responsible for two reasons: failure to install lights and repair the pathway.
  • Black molds: It seems that some of your tenants are getting sick because of the presence of black molds. If the doctor diagnosed their disease as mold-related, you’d have to pay for their medical fees and the mold removal from their property.
  • Trespassers: If burglars are able to enter your tenant’s property because of your faulty security system, you may have to pay for all damages. 
  • Untimely eviction: You’ll be held responsible if you evict your tenants without due process.
  • Lease denied: If you’re found responsible for not renewing their lease, you’d be sued under the grounds of discrimination, especially if your reasons are inappropriate. 


These are the common uses of landlord liability protection, but there might be more cases depending on the situation. Therefore, it’d be best to enhance your coverage by adding an umbrella policy to broaden the scope of your insurance.

What Does The Liability Insurance Not Cover?

If you’re not found guilty of all the damages and injuries your tenants sustained, then you don’t have to worry about your insurance. Here are some cases you’d want to know: 

  • Unfortunate party events: If your tenant hosts a party with a lot of people involved and some of them cause damages to the property and injuries, then you have no responsibility for their medical bills. 
  • Appliance breakages: As a rule of thumb, tenants must notify their landlord if something breaks and becomes hazardous. If they fail to report it as soon as possible and have already caused some diseases and injuries, you won’t be held responsible for these cases because you’re not informed earlier.

 

Furthermore, you don’t have to go the extra mile just to protect your tenants. In fact, there’s a separate policy for them called renter’s insurance. If you want, you may advise them about it, especially if the cases mentioned above are possible.

Is The Landlord Liability Insurance Mandatory?

So far, no US state requires landlords to apply for liability insurance. However, if it protects you from all the risks that may result in financial ruin, why not purchase it? It has more benefits that outweigh the cost, so it’s essential to have one.

How Much Does Liability Insurance Cost?

The average cost of landlord liability insurance in the US is USD$1300. This cost pertains to dwelling policy three, which includes liability protection. Other dwelling policies may be lower in price. So, ask your insurance provider about it. 

Final Words

A landlord liability insurance will protect you from paying all costs such as medical bills, property damages, and more, especially if you’re responsible for these circumstances. Don’t assume that your homeowner’s insurance policy will cover all the damages. To be sure, ask your insurance provider about it to know which coverage you need to have.  

Furthermore, be careful of tricky and irresponsible tenants. You’re only liable for the damages you failed to address. If they’re the ones who failed to report the problems as early as possible, then you may not be liable for all the damages they incurred.

Also, if you want to protect your tenants from suffering high costs and damages, you may advise them to apply for renter’s insurance.

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