What is landlord liability insurance?

By Allstate

Last updated: June 2023

Liability coverage is a standard offering in most landlord insurance policies. Liability insurance on a landlord's policy will cover liability due to bodily injury or property damage arising out of the ownership, maintenance, and use of the rental premises only. Liability on a landlord policy will not cover any liability due to personal exposures, or any other exposure outside of occurrences arising out of ownership, maintenance, and use of the rental property.

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Do I need landlord liability insurance?

Most homeowner policies will allow for part-time occasional rental of a residence. What they don't typically allow for is a premises that is rented or available for rental full-time. Landlord insurance typically provides coverage for the structure of the home. Liability coverage that may help prevent you from paying out of pocket if you are found at fault in certain situations arising out of the ownership, maintenance, or use of the insured rental premises.

If you have a mortgage on the home you're renting to tenants, you may find that your lender requires you to have landlord insurance. A mortgagee is more concerned about property damage coverage to the dwelling itself then liability insurance for the property owner.

What is covered by landlord liability insurance?

Tenant injuries, for instance, may be a concern for landlords. Let's say a loose handrail causes a tenant to fall. You could be held responsible for resulting injuries, according to the Insurance Journal, if you were found negligent in maintaining the property — or even if you just failed to warn the tenant of a potential safety risk.

If that were to happen, your landlord liability coverage would likely kick in to help pay your legal defense and help cover court judgments made against you, up to the limits stated in your policy. Defense costs aren't subject to the liability limits, just the court judgement.

Other situations could also expose you to liability, according to the Insurance Journal. If you fail to provide proper security for your tenants, for instance, or if your tenant engages in unlawful behavior and you fail to take measures to stop it, you could be held liable. Landlord liability coverage can usually help protect you in these and other similar scenarios, up to the limit that's set in your policy.

Having a landlord insurance policy with liability coverage can go a long way toward giving you the peace of mind that comes with knowing you have a safety net in place, just in case.