Hi, this is Tanya with Envy Property Management. In the last couple of videos, we’ve been talking about the different types of tenant insurance in property management, more specifically, renter’s insurance and tenant liability insurance. Today we are going to dive into the benefits of tenant liability insurance and why landlords should ALWAYS require their tenants to have a tenant liability policy.
As previously discussed in our video a couple of weeks ago, tenant liability insurance is NOT true renter’s insurance. It is a master insurance policy resulting in protection for both the landlord and the tenants. The primary purpose of tenant liability insurance is to protect the landlord’s property from losses directly caused by the tenant. For example, say a tenant left a candle burning and it caused a fire in the home. The tenant liability policy would cover the damage caused to the structure of the home due to the negligence of leaving a candle burning. It would not, however, cover the tenant’s personal belongings.
What Does Tenant Liability Insurance Cover?
As with any insurance, coverage depends on the policy taken out and the terms and conditions. Generally, tenant liability insurance covers the following:
- Damages to the structure of the property due to tenant-related causes.
- Legal liability to the landlord’s property, for things like smoke, fire, water damage, etc.
How Do Tenants Benefit from Tenant Liability Insurance?
A common question tenants may ask if you require them to take out a tenant liability insurance policy is, don’t you as the landlord already have insurance? Of course, all legitimate landlords take out a Rental Dwelling Policy. However, if there are tenant-related damages to the property, the tenant liability policy should cover the expense. The landlord shouldn’t be required to file a claim against their own policy for such damages.
Let’s look at one example. Say the tenant left a hose attached to the exterior home water supply bib through the winter. The water left inside the hose subsequently froze all the way into the interior water line, causing it to burst and flood the basement. Tenant Liability coverage may help protect the tenant from paying out of pocket for certain costs if they are found legally responsible for damage to the property from the flood.
Tenants likely don't expect an unintentional accident to occur but tenant liability coverage is a great way to protect the tenant from circumstances like this.
How Do Landlords Benefit from Tenant Liability Insurance?
The primary purpose of tenant liability insurance is to protect the Landlord’s property, their insurance program, or their property insurance deductible from losses caused by the tenant. It is also necessary to protect the Landlord from frivolous litigation as tenants are the primary source of bodily injury and property damage liability. This may be from actions including: assault & battery, operating an unlicensed day care, animal bites, and the use of firearms. The list is endless. When plaintiff attorneys discover that a liable tenant has no assets and no insurance, litigation turns to the Landlord for failure to provide a safe premises.
Thanks for watching today’s video on the benefits of tenant liability insurance. My name is Tanya with Envy Property Management, make sure you subscribe to receive more valuable information about your investment properties. If you have any questions about property management or what we can do to help you increase your return on investment, please call us at 801-337-4337, or visit our website at envypm.com.
