Landlord Liability Insurance FAQ

How Does Liability Insurance Protect Rental Property Owners?

The coverage is only as good as the policy. Owners of rental property should purchase a comprehensive landlord insurance policy that offers broad protection against natural and “manmade” threats.

Landlord liability insurance commonly covers property damage and lost rental income from natural phenomena such as fire, floods and lightning, but you need to be clear about what is and is not covered. Landlord insurance should also cover losses from burglary, vandalism and other intentional acts, including malicious damage by renters. And last but not least, rental property insurance should cover legal fees and other costs of defending against premises liability lawsuits and other personal injury claims.

Key considerations when choosing landlord insurance:

• Beyond personal injury, the policy should protect the owner against claims by tenants or visitors for discrimination, unlawful eviction, and other torts.
• The policy should insure all vehicles relating to maintenance and supervision of the rental property.
• Don’t skimp on coverage. The policy should reflect the property value and rental income.
• Be crystal clear on whether your policy covers negligence or acts of property managers (employees or third-party management).

What Does Renter’s Insurance Cover?

While tenants may not have as much at stake financially as property owners, they also need insurance – especially tenants with expensive personal belongings. Tenant losses from fire or theft are not covered by the landlord’s insurance.

Renter’s insurance typically protects tenants by covering losses to their personal property caused by incidents like fire or theft, up to a specified limit such as $25,000 or $50,000. These policies generally have deductibles ranging from $250 to $500, meaning the insurance kicks in only for losses exceeding this deductible. Besides fire and theft, renters’ insurance often provides personal liability coverage, commonly around $100,000, for any harm or damage the tenant might cause. For instance, if a tenant accidentally floods a neighbor’s garden or if a guest is injured due to the tenant’s oversight, this coverage can help address those situations.

Renter’s insurance is a package of several types of insurance designed to cover tenants for more than one risk. Each insurance company’s package will be slightly different – types of coverage offered, exclusions, the dollar amounts specified and the deductible will all vary. Tenants who live in a flood or earthquake-prone area will need to pay extra for coverage. Policies covering flood and earthquake damage can be hard to find; tenants should shop around until they find the type of coverage that they need.