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?

  • When a tenant or visitor is injured due to the landlord’s negligence
  • When a property maintenance issue results in a tenant’s injury or personal property loss
  • If a tenant is injured or becomes ill as a result of the landlord’s failure to keep the premises safe and in good working order

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

  • A loose deck railing breaks free, and a guest falls
  • A tenant falls on an icy sidewalk
  • Toxic mold is reported in one of your units and tenants are getting sick
  • A burglar breaks into a rental because the locks were not fully secure
  • A landlord evicts a tenant without due process
  • A tenant denied a lease sues on grounds of discrimination

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.

Safety Concerns

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.

  • Keep grounds and parking lots maintained and well-lit.
  • Trim hedges that can create visibility hazards for drivers.
  • Make sure railings are sturdy and check them regularly.
  • Keep walkways free of debris and ice.
  • Provide regular maintenance to heating and air conditioning systems.
  • Regularly check the safety of all gas and electric equipment and appliances.
  • Make sure smoke alarms and fire extinguishers are installed and functioning.
  • Require lint removal from dryers.
  • Complete a full maintenance check on each unit before a new tenant moves in.
  • Remove all standing water; eliminate roof and plumbing leaks and trapped moisture.

Security Issues

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:

  • Install doors with peep holes so that tenants can screen visitors before opening the door.
  • Keep all locks in good condition, and change locks between tenants.
  • Provide dead bolts on all internal doors.
  • Keep all outdoor areas such as stairs and walkways well lit.
  • Install motion detector lights and security cameras to record activity near doorways and windows.

Wrongful Acts

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:

  • Know your rights and responsibilities as a landlord in your state.
  • Never deny a tenant a lease on the basis of race, color, religion, etc.
  • Never enter a leased rental unit without prior notice, unless it is an emergency.
  • Keep records of all lease paperwork and interactions with tenants.
  • Make sure you have a signed lease in hand before the tenant is allowed to move in.
  • Communicate with tenants professionally, in writing; file all letters and emails securely.
  • Make notes of any in-person conversations and/or follow up with a confirmation letter on what was discussed and the date.
  • Follow all eviction laws and guidelines in the event an eviction is necessary, and document the reasoning, every step taken and relevant dates in the process.

How Much Landlord Liability Insurance Do You Need?

Since every rental is different, the amount of landlord liability coverage you need is completely dependent upon your circumstances. For example, if your rental units are located in a high crime area, you might want additional protection to cover you if a tenant files a claim regarding the apartment’s security after a burglary. If you have a swimming pool or other “attractive nuisances” on site, you should consider adjusting the amount of your policy to cover potential claims of injury resulting from those features.

Do some research on legal fees associated with the average landlord liability lawsuit in your area. You can also request help from an independent agent in the Trusted Choice network. A local agent can provide customized landlord liability insurance quotes and help to ensure that you get the coverage you need.

How to Reduce Your Landlord Liability Costs

Even when you have done everything you can to reduce the risk of liability claims, it is still advisable to carry liability coverage. Here are some ways to obtain landlord liability insurance affordable:

  1. Compare quotes with an independent member agent in the Trusted Choice network, who can review policies and options available from multiple insurance companies.
  2. Ask your agent about property enhancements that can lower your rates. For example, you may be able to get discounts by adding fire sprinklers to all rental units.
  3. Increase your deductibles. Rather than reducing coverage to save money, ask for a higher deductible, which will lower your premium while keeping you protected.
  4. Ask your agent whether bundling is available. Many agencies bundle multiple policy types, which can reduce your premiums.

When you need landlord insurance quotes, we can help. The Trusted Choice network includes over 300,000 business owners, employees and agents nationwide who provide individuals and business owners with dedicated, customer-focused service. Get a quote or find an agent today.