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Landlords' insurance is an insurance policy that covers a property owner from financial losses connected with rental properties. The policy covers the building, with the option of insuring any contents that belong to the landlord that are inside.
The policy will normally cover standard perils such as fire, lightning, explosion, earthquake, storm, flood, escape of water/oil, subsidence, theft and malicious damage. Each insurance policy is different and may or may not include all these items. Optional coverage might include accidental damage, malicious damage by tenant, terrorism, legal protection, alternative accommodation costs, contents insurance, rent guarantee insurance, and liability insurance.
Landlords' insurance policies typically do not cover any personal property belonging to tenants, or otherwise protect the interest of tenants; although a liability policy protecting a landlord or property manager will be of benefit to tenants should they incur a loss for which the landlord is responsible.
How to Prepare for Rental Liability Claims
If you have invested in one or more properties for rental income, that investment inevitably comes with questions, concerns and risks. What can go wrong? What events can have a negative effect on your rental revenue? What if a water main breaks and floods your rental property? What if someone gets hurt on the premises and files a lawsuit? Several different types of coverage come into play to cover the different risks you face as a landlord.
If you have only one rental property or are renting out a room in your home, you can cover your landlord liability with an added endorsement on your homeowners policy. However, if you are purchasing properties as a business venture, you will need a specific landlord policy. For immediate assistance, find an independent agent in the Trusted Choice® network. A local member agent can answer all of your questions and provide quotes tailored to your specific needs.
When Can Landlords Be Held Liable?
What is Liability Insurance?
Liability insurance is a way to protect your financial assets in the event that someone files a lawsuit against you in an attempt to collect financial compensation for damages. Damages can range from financial difficulty to emotional harm to physical injury and death.
What Does Landlord Liability Insurance Cover?
For landlords, legal claims can result from a range of causes, including slips and falls, property damage from leaky pipes and break-ins. Landlord liability insurance covers the cost associated with your legal defense, whether or not you are found to be at fault.
As a landlord, you have a responsibility to keep your property well-maintained and safe to prevent injuries and illnesses. However, even with important maintenance and safety measures in place, not every liability circumstance can be prevented. Landlord liability insurance helps you to protect your rental property investment in the event of a liability claim filed by a tenant or a visitor to your rental property.
Landlord Liability Claim Scenarios
Because of the wide range of potential claims, it is critical to have adequate liability insurance to protect your investment. You may also choose to enhance your landlord liability insurance with an umbrella policy that will extend the amount of coverage you have in the event of a large claim.
How to Reduce Your Landlord Liability Risk
The costs of litigation and legal defense are some of the primary risks landlords face because these costs can quickly become financially devastating. The good news is that doing your due-diligence to keep your rental premises safe will decrease your liability risk.
The best way to avoid injuries that can result in liability claims on your rental property is to keep your property well-maintained and to quickly respond to any concerns regarding safety that your tenants may present.
Preventing security issues on the premises is another important step toward protecting your renters and reducing your risk. Here are ways to address these potential issues:
Finally, it is important to reduce the risk of liability issues related to discrimination, wrongful eviction and other claims from discontent tenants who feel they have been mistreated. Some important steps you can take include:
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