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Personal Liability Insurance: How it Protects your Business Interest as a Landlord


October 7, 2019 ( Newswire) If you are renting out a property then you will already no doubt have lots of hassle in terms of paperwork, tenancy agreements, inventory lists etc and one other thing to add to this list will be the insurance policy you need to then investigate and initiate. It is not actually federal law that people have an insurance policy in place and because of this, there are a lot of people that don't take the time out to get this done. Although it may seem like an initial hassle to do, there are clearly a of advantages to having this in place and could save you from having to pay out a large sum of money in the event of something going wrong. Landlords will generally think of only ensuring the building is covered from a structural point of view and may not go the next step to ensuring that the contents are covered or the element of personal liability.

What does Personal Liability Insurance Actually Cover?

There are lots of different scenarios where the personal liability cover of an insurance policy would take effect. To keep this in simple terms, according to Lemonade, personal liability is something that an individual is legally responsible for. There are many references to what this can refer to which include situations around bodily injury or even some property damage that you are personally responsible for creating. It is generally something that you would find in a renters or homeowners insurance policy which will protect you if you are the person that is responsible to payout for something that was unfortunate enough to happen to another person. Here are a couple of examples as to how this would apply:

  1. If someone else is in your property and they have a horrible accident - this could be anything from a minor scratch to a major injury (like falling down the stairs). If you are then liable for this (say they fall down the stairs due to a dodgy carpet that has been laid) then this is where this insurance policy will be of benefit.
  2. If there is someone in your property that is listed, and the policy and they cause damage to someone else then this policy would apply. This could even be a pet!

What will the Liability Insurance Payout?

If you the tenant, then needs the protection of liability insurance it will pay out on several levels. This will include damage caused say by a pet, damages that have been caused by other people in the household, any property damage payments, if you need to go to court it will cover the lawyer fees associated with this and any medical payments related to this.

It is usually quite a simple process of payout, and you wouldn't normally expect to have a lot of hassle around this.

Risks to Tenants

It is clearly in the best interests of the tenants to take this sort of cover out and as a landlord is something that you can mandate in the contracts as a necessity or they cannot have the tenancy agreement. Some landlords force this so that they have some peace of mind where if there are any claims, accidents or events that require legal intervention etc, the tenant has it all in hand and the landlord is not then in a place where they are forced to get involved. The cost of these sort of insurance covers are so low that it normally is not a problem.

Another big risk around this could be that there is none of this insurance in place and the tenant finds himself/herself with someone in their property, they have had an accident and then they need to get involved in a legal case that could involve not only a lot of time and emotional stress but a lot of money in payout. If the tenant, then does not have a good level of savings they could find themselves in a bit of financial difficulty trying to resolve the claim. If a court order is executed and they need to then pay out a sum of money, this is a must and cannot be deviated from.

Consequently, this could then affect the tenants ability to make the normal tenancy payments and affect the landlord. This is exactly why some landlords will then add it to the contract as a mandate as it lowers this risk.

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