Property owners have a responsibility to preserve their property, neighborhoods, and to protect tenants, their guests, and the public from harm. Owners and managers must evaluate their risks on a regular basis to determine their possible liability and financial loss, then carry the appropriate insurance to deal with the liability and property damage risks.

A well-designed and thought out insurance package can protect rental property and managers from losses caused by many types of 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  of defending personal injury lawsuits.

The following example concerning a real estate broker illustrates some possible pitfalls. The broker had listed a property for sale for an owner who had left the state. While waiting for the property to sell, the owner asked the broker to rent the home for him if he could. The broker did so. Additional liability insurance never crossed his mind. Real estate agents perform similar services all the time.

The tenant slipped on a stairway that lacked a proper hand rail and cracked her foot, so she sued both the owner and the broker. The owner had liability coverage under his homeowner’s policy. A real estate broker usually carries Errors and Omissions insurance, and liability insurance on any property they own or lease. However, the broker was not covered for an accident in a listed property; not even coverage for an attorney to defend him. Whether the broker is liable is questionable, however it will cost thousands in attorney fees to find out. The plaintiff's lawyers know they have caught the broker defenseless.

Landlords and property managers must always carry enough
insurance to provide legal protection, at the very least.

Buying Landlord Insurance is a Complex Process

Let's look first at the problems facing landlords with just a few rental properties. A typical homeowner's insurance policy includes $300,000 to $500,000 in liability. Some of them will still allow a small landlord to extend that liability coverage up to a maximum of five rentals. Beyond that, it is necessary to purchase separate liability insurance along with the property insurance on each property. No company will write a blanket insurance policy across multiple properties. Each four unit or less building must be written separately. When an investor gets beyond four or five properties, a landlord should consider a business liability insurance package as well; sometimes that can be done by using an umbrella policy.

Insurance companies continually evaluate their exposure and target the areas of the casualty business where they think they need to increase, or decrease business, to better balance their risk.  As a result, the insurance business is in a constant state of change. Leonard Insurance has the expertise to negotiate for the best value deal.

Here are a few tips on choosing insurance as a landlord:

• Carry sufficient coverage to protect the value of the property and assets.
• Make sure the policy covers not only physical injury but also mentions libel, slander, discrimination, unlawful and retaliatory eviction and evasion of privacy suffered by tenants and their guests.
• Carry liability insurance on all vehicles used for business purposes, including any employee's car or truck if it will be used for your business.