What is Landlord Liability Insurance and How Much Does It Cost?

If you're a landlord, you know that accidents happen. And if something happens on your property, you could be held liable. That's why it's crucial to have landlord liability insurance. This type of insurance can help protect you from lawsuits and other financial damages.

There are a few things to consider when choosing landlord liability insurance, including the cost and the coverage. Keep reading to learn more about landlord liability insurance and how it can help protect you.

‍

What is Landlord Liability Insurance?

As a landlord, you face several risks for which you may be held liable. For example, if one of your tenants is injured on your property because of your negligence, you could be held responsible.

Landlord liability insurance is insurance that protects you from these risks. It can help pay for legal defense fees, settlement costs, and damages if you're sued. Liability insurance for landlords is an important way to protect yourself and your business.

The benefits of landlord liability insurance far outweigh the cost. For a small investment, you can get peace of mind knowing that you're protected from the financial consequences of a lawsuit.

Looking to protect yourself and your investment? Get an instant quote from Obie today. No paper applications, week-long waits for quotes, or back and forths with brokers. On average, landlords save 25% with Obie.

‍

Homeowner's Insurance vs. Landlord Insurance

If you are a new landlord, switching from homeowner's insurance to landlord insurance is an important move. It provides coverage against liability claims and offers other coverages that  homeowner's insurance doesn't provide to landlords.

Homeowner's insurance covers only owner-occupied properties, meaning the house or unit must be your primary residence. However, the situation is entirely different once you rent the home and collect rental income. A tenant-occupied home has additional, and possibly more significant risks,  than when it is owner-occupied.

In the world of rental real estate, risks such as loss of income and questionable claims from tenants can happen more frequently than you might think. This is why liability coverage for landlord insurance usually has higher coverage limit options than homeowner's insurance.

Landlords who attempt to make a claim for a rental property using homeowners insurance may be in for a rude awakening if their claim is denied for not having the right insurance for their rental.

‍

How Much Does Landlord Liability Insurance Cost?

Liability coverage is usually included in landlord insurance policies. The overall cost of your landlord insurance will generally be higher than regular homeowner's coverage. As a rule of thumb, landlord insurance will cost at least 15% to 25% more than homeowner's insurance.

The annual premium for a landlord insurance policy depends on several factors, including:

• Location: Where is your property located? Does the area have high crime rates or face increased risks for natural disasters? The higher the property's risk, the more you will pay for insurance costs.
• Property: Is it an apartment block or a house in the suburbs? How big is it, and what is its condition? The number of units (single-family vs. multifamily), the amount of square footage, and how well the home is maintained all impact your annual insurance premium.
• Deductible: Your deductible is the amount of money you pay out-of-pocket before your landlord insurance coverage kicks in. By increasing the deductible, you can reduce your annual insurance premium. Conversely, a policy with a lower deductible will cost more each year.
• Coverage: Landlord insurance comes in different forms, such as minimum coverage with DP1 and more extensive coverage with a DP3 policy or an open-peril policy. Each provides coverage for different risks; the more comprehensive your coverage, the higher your premiums.

‍

What Does Landlord Liability Insurance Cover?

Accidents may happen regardless of how much you try to keep your property safe. A slip here and a trip there, a robbery case, a tree falls on the neighbor’s property, and suddenly you could be faced with negligence, bodily injury damages, property damage, and other liability charges.

If and when this happens, you'll be thankful you have landlord liability insurance coverage. Some of the covered risks include:

Medical

Imagine that your tenant, their guest, or a handyman or contractor falls and gets injured on your property. Or an infestation of black mold begins to flourish because a water leak wasn't properly repaired. A personal injury lawyer will claim that you failed to maintain the property and ensure it was safe and up to code. If sued and found negligent, your liability insurance would cover the medical and rehabilitation costs of the aggrieved party up to your policy's limits.

Legal

Legal fees can quickly add up. Your landlord liability insurance will also cover legal representation, including fees for defense, court judgments, and any related fees you might need to pay.

Negligence

Let's say one of your tenants comes to you with a problem. They tell you they’ve been having trouble with their neighbor who has been making threatening gestures and comments. You tell the tenant that you'll look into the situation and ask them to keep you updated. However, the situation escalates, and the tenant ends up getting injured. They decide to sue you for negligence, claiming that you didn't do enough to protect them from their neighbor.

If the tenant can prove that you were aware of the potential for violence but did nothing to prevent it, they may be able to hold you liable for their emotional distress. In this case, your landlord liability insurance will protect you from any financial damages the tenant may be awarded.

‍

3 Tips for Choosing Liability Insurance for Rental Property

At first glance, selecting the best liability insurance can be overwhelming. However, it's much easier when you know what factors to consider. Here are 3 important tips that will make it easier to choose liability insurance for your rental property:

1. Consider the limit: Your insurer will only provide coverage up to your liability coverage limits. Any costs above the coverage limit will be paid out of your pocket or through your rental property reserve account. That's why it is important to consider the limits of your coverage. Of course, the higher your limits, the higher your insurance premiums. However, a higher limit will offer you more financial protection when and if you need to make a claim.
2. Compare quotes: While it might be tempting to do so, avoid settling for the first liability coverage you come across. It could offer what you are looking for, but is another insurer offering more for a better price? Comparing quotes from different providers allows you to assess the limits of each provider and what that package offers. Some could have higher limits, while others could be providing coverage for more liability scenarios than their counterparts.
3. Compare the providers: In addition to comparing quotes and coverage limits, you should also compare the insurance companies offering these quotes. How is their customer service? Will your claims be settled in time, or do you have to jump through a lot of hoops?

‍

How To Get Landlord Liability Insurance

As a landlord, you want to ensure you have the right liability insurance to protect your property and other assets. But with so many options, it can be tough to know where to start.

One option is to work with an online insurance broker. A broker can help you compare policies from different insurers to find the one that best meets your needs. And because they're not tied to any one company, they can offer impartial advice.

Another option is to go directly to an insurer (often called a "captive agent"). While this may be easier in the short term, you may not necessarily get the best deal. That's because captive agents often try to sell you their company's products rather than finding the right policy for you.

In the end, working with an online insurance broker is usually the best way to find landlord liability insurance. With a broker, you can compare policies and prices from different insurers and get impartial advice to help you choose the right coverage for your needs.

‍

Get an Instant Quote from Obie Today

If you want to save money on landlord insurance, consider using Obie. Obie makes it easy to compare rates from different insurers, so you can be sure you're getting the best deal.

As a landlord, it's crucial to have insurance for your rental property in case of any damages or accidents. Obie provides insurance coverage for landlords in all 50 states and has insured more than $4 billion in property to date. On average, landlords save 25% with Obie.

Getting started with Obie is easy - simply enter your property address and receive an instant quote. Then, you can choose the coverage that best suits your needs and budget. Go here to learn more and get your free quote today.