Landlord Liability: Insurance
FAQ
How
insurance can help protect a rental property business
From
the Nolo.com Landlord and Tenant Center
How can insurance
help protect a rental property business?
A well-designed
insurance policy can protect a landlord's rental property from losses
caused by many perils, including fire, storms, burglary and vandalism.
(Earthquake and flood insurance are typically separate.) A comprehensive
policy will also include liability insurance, covering injuries or losses
suffered by others as the result of defective conditions on the property.
Equally important, liability insurance covers the cost (mostly lawyer's
bills) of defending personal injury lawsuits.
Here are
some tips on choosing insurance:
- Purchase enough coverage to protect the value of the property and
assets.
- Be sure
the policy covers not only physical injury but also libel, slander,
discrimination, unlawful and retaliatory eviction and invasion of
privacy suffered by tenants and guests.
- Carry
liability insurance on all vehicles used for business purposes, including
the manager's car or truck if he or she will use it on the job.
If you need
more information, The Legal Guide for Starting and Running a Small
Business, by Fred S. Steingold (Nolo), contains a detailed discussion
of small business law, including how to insure your rental property.
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.
The average
renter's policy covers tenants against losses to their belongings occurring
as a result of fire and theft, up to the amount stated on the face of
the policy, such as $25,000 or $50,000. Most renter policies include deductible
amounts of $250 or $500. This means that if a tenant's apartment is burglarized,
the insurance company will pay only for the amount of the loss over and
above the deductible amount.
In addition
to fire and theft, most renter's policies include personal liability coverage
($100,000 is a typical amount) for injuries or damage caused by the tenant
-- for example, if a tenant's garden hose floods the neighbor's cactus
garden, or a tenant's guest is injured on the rental property due to the
tenant's negligence.
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 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.
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