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"Landlord Liability Coverage: Get the Most You Can Afford"


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Landlord liability coverage protects you from lawsuits – frivolous and otherwise. Please don't be cheap on this one. Yes, you'll definitely want to price shop, but make sure you get the most coverage you can afford. If you underinsure yourself, and the worst-case scenario happens, you could literally be ruined.


THE NECESSITY OF LIABILITY INSURANCE


We live in a truly litigious society, which makes having adequate landlord liability insurance critical. My mom always used to say, "anyone can sue anyone for anything." And she was, and continues to be, 100% correct.

Did a tenant slip on your icy sidewalk? Prepare to get sued.

Did a tenant get bit by the neighbor's dog? Prepare to get sued.

Did a tenant slip on a wet bathroom floor? Prepare to get sued.

Did a tenant stub his toe on the stove? Prepare to get sued.

I could go on and on but you get the point. As a landlord renting a property, your risk of getting sued goes up exponentially. Part of this is understandable – people will be living in a property you own, and household accidents are not uncommon.

But part of this also falls on the shady side – you are more likely to be a target than a "non-landlord" because you could be misperceived as being wealthy simply by virtue of the fact that you own multi family income property.

The bottom line: don't allow yourself to be used by your tenants like an ATM. Get the most liability coverage you can afford.



TIPS & TIDBITS


  • I recommend at least $500K of liability coverage per property / policy. Get more if you can.
  • Target a deductible of $1,000-$2,000, depending on the cost impact.
  • Get umbrella insurance for additional protection.
  • View your liability insurance as only one piece of your broader risk management strategy.
  • Make sure that the owner reflected on the property's title matches the name of the insured on your policy.
  • Run this blueprint, as well as any other ideas you may have, by your insurance agent for a "sanity check."
  • Like building insurance, some things will increase the cost of your liability coverage (pets in apartments, fireplace, trampoline, etc.). Keep this in mind when buying rental property.



So, there you have it. Landlord liability insurance can and will protect you from getting burned. Shop around, get the best liability coverage for your budget, and do not take this decision lightly. You don't need any additional, unnecessary risk in your life, so please proceed carefully.



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5 Responses to Landlord Liability Coverage: Get the Most You Can Afford

  1. hunter says:

    I agree with the author – get the most landlord liability insurance you can possibly afford. Also, get an umbrella on top of it. I work for an insurance company and you wouldn’t believe the claims that come in. I would not take any chances!

  2. Ying says:

    I have a $50,000 and a $70,000 condos under an LLC. How much liability coverage should I buy? Or it is independent of the property value? Good info. Thanks.

  3. angst says:

    @ ying: Landlord liability coverage has nothing to do with the property’s value…that’s part of the building insurance equation. For liability, get at least $1 million of coverage, $2 million if you can afford it.

  4. Tamela Fleitman says:

    Hey There. I found your blog via msn. Very well-written article. I’ll make sure to bookmark it and come back to read more of your helpful info. Thanks for the post. I will certainly return.

  5. Linda says:

    Thank you for the well-written article. I currently have a few rental properties owned by a LLC. Should I purchase a Comprehensive personal liability or a general liability coverage? All titles are under the same LLC. Thanks.

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