General Liability limits on Landlord insurance policy?

Question

Hello!

I am purchasing my first rental property in a few weeks. I have gotten several quotes for Landlord insurance but only one quote included General Liability limits of $1M occurrence and $2M aggregate. Is it necessary to have $1M in occurrence? All other quotes were $500,000 per occurrence and most companies I got quotes from either do not go above $500,000 per occurrence or want to charge a very high premium to have $1M.

Thank you!

Chris Campeau · Answer

You had me so interested that I contacted one of my insurance agents.  I had noticed that every single policy I have had (I have 24 multi unit buildings) they are all at the $1 Million per Occurrence and $2 Million aggregate.  At first I was guessing that maybe in Massachusetts where I am that the State may have minimum insurance requirements but after speaking with my agent she said simply that the price difference between $500k and the $1 Million was so negligible that the $1 Million simply made sense.  She has always been up front and honest with me so I did not press her on the actual price difference but rather took her for her word.

Lien Vuong · Answer

That great personal feedback @Chris Campeau!

Mike McCarthy · Answer

@Cassie Jones my landlord policies have a $250 or $300K liability cap, but then I have an umbrella policy for $1M over all my rentals, home and auto.

My understanding is that this is a cheaper alternative and covers more policies. The umbrella is a good solution for a lot of owners (not using LLCs)

Carl Millsap · Answer

@Cassie Jones ok. I've always carried the $1M / $500K on single family. I would write into your lease specific clauses regarding high risk items i.e. no swimming pools, water beds, trampolines, types of pets (dogs, snakes etc).

Consult your attorney on the lease and I'm sure your insurance agent can guide you but I would think $500k per occurrence is enough.

Cassie Jones · Answer

@Carl Millsap This is a single family home and it will not be under an LLC.

Carl Millsap · Answer

@Cassie Jones What type of property are you buying? Single family, Duplex, Fourplex?

What are you looking at for worst case scenario?

I would imagine $500k per occurrence / $1M will cover most things.

When you buy your next property set-up another LLC and get another $500K / $1M policy for that LLC. Assuming you want to buy a 2nd and that you used an LLC for this purchase.

General Liability limits on Landlord insurance policy?

Most Popular Reply