Landlord Liability Insurance - ALLCHOICE Insurance - North Carolina

Landlord Liability Insurance

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Being a landlord can be a highly rewarding but challenging task. After all, you’re responsible not only for the well-being of your rental property, but also that of your tenants’. 

Unfortunately, accidents can happen, and even the most cautious landlord can never be too careful, especially if a tenant or a guest becomes injured within your property. Similarly, you as a landlord may also be facing risks when you make the mistake of leasing to a problematic or unruly tenant since you’re the one expected to deal with them. Landlords are often caught between the crossfire of tenant disputes, and may even be held liable for certain damages just on the virtue of them owning the property. 

To protect yourself not only from a wide range of lawsuits but also fraudulent claims, getting landlord liability insurance coverage will work to your advantage. Continue reading to know more about landlord liability insurance. 

What Is Landlord Liability Insurance?

Often referred to simply as liability coverage, landlord liability insurance is a policy specifically applicable to rental property owners. Most standard landlord insurance policies include this type of coverage, alongside property damage policies that cover for the structure of the rental property.

Landlord liability insurance is meant to financially protect you from either a tenant or guest attempting to sue you for damages. Damages, in this sense, can range from financial and emotional stress, as well as physical injuries and even death. Whether or not you’re found legally responsible for the damages that occurred, landlord liability insurance can protect you from making out-of-pocket payments for both legal defense costs and the amount required to compensate for damages that had occurred. 

Does a Landlord Need Liability Insurance? 

Landlord liability insurance is often not mandatory, but being a business owner should compel you to get adequate coverage to ensure your commercial venture won’t be compromised in the long run. 

One other good reason you should get landlord liability insurance is if you have a loan or mortgage for the property you’re renting out as your lender might require you to have one. 

Your homeowner’s policy will also not cover for a home you’re renting out, which also makes landlord liability insurance a necessity. Thinking that your homeowner’s insurance can provide adequate coverage is a rookie mistake most landlords make. As early as you can, correct your course and get liability coverage. You can also consider buffing your coverage by getting landlord liability insurance with an umbrella policy. 

What Does a Landlord Liability Insurance Policy Cover?

Standard homeowner’s insurance and landlord liability insurance may have some similarities, though the main difference is that the latter includes specifics such as tenant damages, tenant injuries, and uninhabitability. 

Here’s what your coverage may include:

  • Tenant damages: This refers to the damages a tenant or their guests have caused while renting out the property. These can include failure to maintain the property, or if a tenant willfully destroys the rental home before their lease agreement is terminated. Repairs that you have to do as the landlord will be covered in this clause. 
  • Tenant injuries: More often than not, the landlord is liable for injuries that a tenant or a guest may have sustained in the rental property. The tenant injury clause covers for both the medical and legal fees the landlord incurs if they are proven to have been negligent in maintaining their property, thereby causing the injuries. 
  • Uninhabitability: This covers a similar situation to the tenant damages clause, but is specifically applicable to when the rental property is deemed uninhabitable because of the severe damages it sustained. Since the rental home is uninhabitable, it follows that the landlord will lose their profit and would have to make necessary repairs so that the property could be rented out again. The uninhabitability clause can recompense for the lost profits until such time the necessary repairs have all been completed. 
  • Fair rental value coverage: If you have a mortgage on your rental home, this clause helps landlords offset the mortgage expenses incurred if there are no tenants who can occupy your property.
  • Protection from inflation: Under an unstable economy, landlords are protected by this clause from inflation, wherein your policy limits and premium discounts are adjusted to take inflation into consideration.  
  • Security: This covers for the installation of security features, such as proper lighting and parking safety.
  • Personal injury protection: This covers the landlord from a tenant’s attempts to claim injuries resulting from slander, libel, invasion of privacy, and wrongful eviction or entry. 
  • Lock replacement: Covers for the costs of replacing keys and locks. 

What Is a Landlord Liable For?

Liability can arise from various situations, most of which are often unforeseen. You can always refer to the Ten Commandments of Landlord Insurance to know what to avoid, but most landlords may not always be aware of these. Regarding liability, a landlord has a higher chance of being held legally culpable if they have prior knowledge of what may have caused damages to the tenants or their guests. Here are some instances in which a landlord can be found liable:

  • Accidents caused by poorly maintained facilities within the rental property
  • Theft and burglary resulting from faulty locks or inadequate security measures 
  • Health hazards such as severe mold appearing all over the property, causing or exacerbating allergies and respiratory illnesses
  • Wrongful eviction or eviction without due process
  • Discrimination allegations from a tenant who was not allowed to rent your property 
  • Faulty electrical and plumbing 

How Much Does Landlord Liability Insurance Cost?

Because landlords are more at risk compared to homeowners, you can expect to pay around 25% to 25% more for a landlord liability insurance policy. This is because renting out a property entails a certain kind of upkeep that may be more than what homeowners typically spend on since landlords have to take into account not just the property itself, but also the safety of tenants and guests. 

In terms of rental homes in particular, size also matters. This is because your landlord insurance costs may also be affected by the type of rental home you own and how big it is. Here’s a quick summary of various types of rental homes and their corresponding average sizes: 

Rental Home TypeBrief DescriptionAverage Size
Single-family homesHomes detached from a unit2,301 sq. ft.
Multi-family homesCan be a duplex, triplex, or fourplex1,057 sq. ft.
CondominiumsPrivately owned in a multi-unit building1,200 sq. ft.
ApartmentsCan fall under low-rise, mid-rise, and high-rise882 sq. ft. 
Luxury homesFor high-end renters2,500 sq. ft. 
Vacation homesFor short-term stays like Airbnb1,850 sq. ft.
Getaway homesOften found outside of the city1,850 sq. ft. 
Average Rental Home Sizes

While your needs and preferences would dictate whether or not you should get landlord liability insurance, most insurance agencies recommend having a minimum liability limit of $1 million. Talk to a trusted insurance company to get a landlord insurance quote that can help you calculate the costs of coverage. 

Similar to other policies, there are several factors that can generally affect the cost of landlord liability insurance. Here are some of them:

  • Scope of the policy’s coverage
  • Whether or not the rental home is mortgaged
  • Number of units being insured
  • Value of the property
  • Your net worth
  • The property’s location
  • The condition and age of the building
  • The facilities and amenities available such as a swimming pool, HVAC system, etc.
  • The type of property being rented out
  • Security features

In general, you may seek ways to save on expenses for your landlord liability insurance. Some options you can consider include comparing policy rates, regularly maintaining your property, and being eligible for discounts. 

Protect Yourself from Liability

As a landlord, you’re often at risk of being liable for many unforeseen situations that can transpire in your rental property. Aside from ensuring that you’re covered from property damage, keep yourself protected from lawsuits and fraudulent claims by getting landlord liability insurance. Work with a landlord insurance agency to get the best liability insurance coverage for your type of rental property.

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