Published: May 2015
Being a landlord has its perks: You can be your own boss, manage your own time, and you might even enjoy a few tax breaks.
But being a landlord may also come with risks. From keeping up the property to managing tenants, you have responsibilities that can expose you to potential lawsuits if something were to go wrong.
That's where landlord liability coverage can help.
Liability coverage is a standard offering in most landlord insurance policies, and it can help protect you in the event that you're found liable if someone is injured on your property or if you are required to pay for damage done to someone else's property.
Now, a landlord policy may end up costing you a bit more than a homeowners policy — up to 25 percent more, according to the Insurance Information Institute (III) — but that's because landlords usually require more protection than the typical homeowner.
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 cover any court judgments made against you, up to the limits stated in your policy.
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.
Of course, it may also be a good idea to try to minimize your liabilities in the first place. Here are a few measures that the Insurance Journal suggests you take:
- Inspect the property regularly to make sure it's free from hazards.
- Maintain a list of complaints from tenants and document repairs that were made.
- Encourage tenants to come forward with safety concerns.
- Make timely repairs on issues flagged by your tenants.
These preventive measures, combined with the proper insurance protections, can go a long way toward helping to ensure that you enjoy the rewards of being a landlord, hassle-free.