Is $500K of Landlord Personal Liability per Occurrence Reasonable

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Is $500K of Landlord Personal Liability per Occurrence Reasonable

Lauren M.
Investor · Shawnee Mission, KS · Member since 2016 · 24 posts · 2 votes

I purchased a duplex last month. The current management company asks that I maintain $500k of landlord and premise liability insurance per each occurrence and asks that we add them as an additional insured. I checked my current insurance policy and it only has $100k for "personal liability: each occurrence". Does $500K sound extremely high? I'm scared it will make my insurance premiums skyrocket. 

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Christopher Brainard
Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
9y

I agree with @Derek Lacy, we carry 2M of liability coverage because the cost difference between 500k, 1M, and 2M was pretty negligible and if something did happen, I'd rather be overprotected vs under protected.

-Christopher

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  • Derek Lacy
    Insurance Agent · Maitland, FL · Member since 2015 · 397 posts · 244 votes
    9y

    You might see about a $20 raise in a year.  And I would suggest much higher limits than $500,000.  Remember this is what protects you if you are sued.  You will find $1,000,000 in coverage can usually cost about $20-30 more per year than $100,000.

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  • Christopher Brainard
    Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
    9y

    I agree with @Derek Lacy, we carry 2M of liability coverage because the cost difference between 500k, 1M, and 2M was pretty negligible and if something did happen, I'd rather be overprotected vs under protected.

    -Christopher

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y
    Originally posted by @Christopher Brainard:

    I agree with @Derek Lacy, we carry 2M of liability coverage because the cost difference between 500k, 1M, and 2M was pretty negligible and if something did happen, I'd rather be overprotected vs under protected.

    -Christopher

     Our strategy as well. The difference is peanuts compared to the peace of mind. OP, out of curiousity, what insurable interest does the management company claim on the property? 

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  • Derek Lacy
    Insurance Agent · Maitland, FL · Member since 2015 · 397 posts · 244 votes
    9y

    That does not have to await the OP.  Their insurable interest is clear from the standpoint of an insurer.  They are an agent of the owner.  This get's into a complicated subject of Agency law, but this is standard and should be expected of any/all property managers.  Here is a quick primer  https://www.hg.org/agency-law.html

    An interesting fact is a property manager is actually an automatic named insured on an unendorsed commercial package policy.  That's how common it is that automatic coverage is granted.  

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  • Lauren M.
    OP
    Investor · Shawnee Mission, KS · Member since 2016 · 24 posts · 2 votes
    9y

    Thank you for your input. I didn't know the premium increase was almost negligible to get a much better personal liability protection. 

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