Lawsuit time! A reminder about risk management for your STR
Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votesLawsuit time! A reminder about risk management for your STR
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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votesThis doesn't sound like negligence to me. If the man was very overweight then I don't see how it is negligent. Unless the stair was rotten, stairs aren't up to code, stairs are not correctly built.
But, Anyone can sue anyone else for any reason at anytime in the USA.
49 Replies
- 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Quote from @Collin Hays:
This occurred on Sunday. Thankfully not at one of our properties, but one about three hundred yards away. A heavier gentleman was apparently walking up the stairs to his cabin, a step gave way and snapped, and his leg fell through. Due to his body weight, apparently the next step gave away, so he was essentially stuck in the staircase, unable to extricate himself. His wife called 9-1-1, and the fire department had to come and release him. He was taken to the hospital. The report is that there were no broken bones, but lacerations on his leg and the sides of his torso from the wood.
What will become of this? Who knows, but I am sure that demand letters and lawsuits will be arriving for the homeowner soon.
Today, take a moment to stop fussing about how much you are/aren't making off of your STR, and focus on risk management of your property. A gross negligence case could bring you down.
Absolutely!
Be proactive in your upkeep and repairs, don't wait for a complaint to address needed maintenance.
This means if you remotely manage, you or a professional should be checking the property above and beyond what the cleaners have to say.
- 3yPhillip BrownPro MemberReal Estate Agent · Kitty Hawk, NC · Member since 2020 · 8 posts · 4 votes
Would love to see how this plays out. Other than keeping up with the property is anyone else doing anything that helps protect themselves as the owner in these situations?
- Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes3y
Quote from @Phillip Brown:
anything that helps protect themselves as the owner in these situations?
I keep a loaded handgun within reach at all times. It has to do with the demographics of my STR market.
- Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes3y
A good insurance policy is absolutely necessary!
- Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes3y
Quote from @Leslie Anne Morris:
A good insurance policy is absolutely necessary!
Agreed. Where we get into trouble is negligence versus gross negligence.
Insurance companies do not want to pay out these claims and will do everything in their power to avoid it. "Gross Negligence" usually means the following:
1. It usually relieves the insurer of liability
2. That means liability is to the homeowner.
3. Gross negligence, depending on the state, allows for not only actual damages, but "exemplary" or "punitive" damages, which can be up to 4 times actual damages.
What is gross negligence? "A lack of care that demonstrates reckless disregard for the safety or lives of others."So if the homeowner was aware that the steps were rotting and needed fixing, but decided (s)he didn't want to pay the money this year to do it, that could easily rise to the level of gross negligence.
Insurance companies are not necessarily on your side. If they can prove up gross negligence on you, they get to walk from the claim and leave you to fight it out.
Make certain you are visiting your property a few times a year to check for rotting wood, wasp nests that you are allowing to accumulate by the front door (wasps can kill people), etc. If you are self managing, the onus is on you to manage your property, not just count your money. - Cambridge, MA · Member since 2015 · 651 posts · 736 votes3y
This happened to us this summer. A mother and her 13 year old son fly in on the red eye. That afternoon the mother crashed in the bedroom and her son crashed on the living room couch. A little later the son who was either totally asleep or close to it, got up and walked in the direction of where his bathroom at home would be. He opened the apartment door into our hallway and opened another door at the top of our basement. He then stepped into the air and fell down a flight of stairs.
It was terrifying. The poor mother slept right through the ordeal. I had to actually walk into the bedroom and shake her awake as my husband stayed with her son at the bottom of the basement stairs. I strongly encouraged the mother to take her son to the emergency room since he had hit his head as he went down the stairs. This meant an ambulance because none of us had a car. Thank god, he was deemed to be fine but we've been expecting to hear from their health insurance company. So far we haven't and hopefully, Airbnb or our insurance will cover it, if we do.
But now our insurance company won't renew our policies next year. It has been super difficult finding an insurance company that will cover us because we rent both on the STR market and the academic market. Evidently the combination makes us close to uninsurable!
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
This doesn't sound like negligence to me. If the man was very overweight then I don't see how it is negligent. Unless the stair was rotten, stairs aren't up to code, stairs are not correctly built.
But, Anyone can sue anyone else for any reason at anytime in the USA.
- Cambridge, MA · Member since 2015 · 651 posts · 736 votes3y
Quote from @Michael Baum:
This doesn't sound like negligence to me. If the man was very overweight then I don't see how it is negligent. Unless the stair was rotten, stairs aren't up to code, stairs are not correctly built.
But, Anyone can sue anyone else for any reason at anytime in the USA.
I have definitely stayed in STRs that were not built to code. They are all much more vulnerable for liability claims than STRs that are built to code. Our local building codes are here to protect hosts, as well as, guests.
No matter how quaint an STR is, if it isn't built to code, it is a potential serious liability, and one, that even great insurance won't protect against.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Carolyn Fuller. I agree but I am wondering if the place is older and doesn't mean modern code are you still liable?
Can you get the city/county to provide testimony that the house is built to code for the time it was built.
For example, our primary house was built in 1954. It has 2 pole Romex wiring no ground. Replacing the wiring wasn't much of an option. Every electrician I had out said to leave it as it was in great shape and just do GFCI's. That is what I am doing and it is still to code.
- Cambridge, MA · Member since 2015 · 651 posts · 736 votes3y
Quote from @Michael Baum:
Hey @Carolyn Fuller. I agree but I am wondering if the place is older and doesn't mean modern code are you still liable?
I recommend you talk to a lawyer.
Now that we are in the hospitality industry a completely different set of liability vulnerabilities apply. And the problem isn't the individuals who stay in our units, as much as it is about how many individuals pass through our units. Accidents are bound to happen and the problem is our guests' health insurance policies.
The insurance companies will go after the hosts or the platforms if an accident happens. Insurance companies do whatever they can do to avoid paying claims.
- Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes3y
In rural areas, there usually is no "code", because there is no municipality or governmental entity that would create, impose, and enforce it. So you are left with common sense, and there's nothing wrong with that. Accidents do happen. It may not be negligence at all. My post was just a warning to be sure your place is as safe as it can possibly be.
Lawsuits will happen if you have a STR for long enough. That is why you have insurance. But you need to be able to demonstrate to the insurance company that you are actively engaged in risk management of your property if you are self managing. Quarterly inspections that you sign and date, etc. Something that displays that you are on top of things.
If you are not self managing, your risk is mostly transferred to the property manager, since they are the ones who are supposed to be managing it. Now if your property manager has advised you of a risk management situation that you failed to allow them to act on, then that is another matter.
- Cambridge, MA · Member since 2015 · 651 posts · 736 votes3y
Quote from @Collin Hays:
In rural areas, there usually is no "code", because there is no municipality or governmental entity that would create, impose, and enforce it.
I think you are wrong. I stayed in a fabulously unique Airbnb in a rural area of Colorado.
It was a liability suit just waiting to happen. Among other serious hazards, there were antlers EVERYWHERE. I was terrified that I'd lose an eye to an antler if I got up to use the bathroom at night. Speaking of the bathroom, the floor in that room was designed to throw a person into the space heater.
The unit was truly just a booking away from a lawsuit.
Just now, I did a search for building codes in that rural area of Colorado. I discovered are building codes in that tiny little town. I have no idea whether the building codes addressed all the issues I found in that Airbnb but building codes there do exist.
I recommend you check your local laws before making such a blanket statement that there are no building codes in rural areas. Regardless of whether the municipality has enforcement resources, you can count on insurance lawyers having the necessary resources to determine whether your listing is up to current building code standards.
- Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes3y
Quote from @Carolyn Fuller:
Quote from @Collin Hays:
In rural areas, there usually is no "code", because there is no municipality or governmental entity that would create, impose, and enforce it.
I think you are wrong. I stayed in a fabulously unique Airbnb in a rural area of Colorado.
It was a liability suit just waiting to happen. Among other serious hazards, there were antlers EVERYWHERE. I was terrified that I'd lose an eye to an antler if I got up to use the bathroom at night. Speaking of the bathroom, the floor in that room was designed to throw a person into the space heater.
The unit was truly just a booking away from a lawsuit.
Just now, I did a search for building codes in that rural area of Colorado. I discovered are building codes in that tiny little town. I have no idea whether the building codes addressed all the issues I found in that Airbnb but building codes there do exist.
I recommend you check your local laws before making such a blanket statement that there are no building codes in rural areas. Regardless of whether the municipality has enforcement resources, you can count on insurance lawyers having the necessary resources to determine whether your listing is up to current building code standards.
If there the area is incorporated, there may be building codes. If not, there likely is none. "Code" can mean a lot of different things. In determining payment of a claim, the insurance company is going to look at negligence. For example, allowing wood to deteriorate, not providing handrails, faulty locks, windows that won't open properly (fire escape), electrical deterioration, etc.
Of course, we aren't risk managers, so there are things we are going to overlook. That is why we have insurance. Where we can get into trouble is willful and knowing failure to act for the safety of guests. Ignoring safety concerns. Now we have a potential gross negligence claim. That is when the insurance company can walk away from you.
- Portland, OR · Member since 2020 · 65 posts · 37 votes3y
@Collin H. Was this a property you own or just manage?
Insurance can cover the medical bills and repairs but what if they file a lawsuit? If it’s a property you own, I’m curious what you have in place for your asset protection.
Do you have the property in a LLC? Trust owning the LLC?
Good luck with everything and hopefully the individual that had the accident is doing okay.
Dado
- Cambridge, MA · Member since 2015 · 651 posts · 736 votes3y
Quote from @Mark S.:
@Collin H. Most states adopt the national building codes as a minimum. States and municipalities can adopt stricter codes.
My husband says it is all states plus territories, like Puerto Rica, where we stayed in a 16 bed beautiful home that was totally not built to code. It was a serious accident waiting to happen. Our fellow guests did have minor accidents but nothing that sent them to a hospital. Sooner or later one of the many guests that passed through that large home either had or will have a serious accident.
Renting out a home that has not been built to code is a bad idea.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Even if code exists, it only applies to new houses or to renovations. When a city incorporates a new code, they don't require all the owners to renovate their houses to meet new code.
This isn't hard. There's a 50/50 chance of the tenant suing. It will go to the homeowner's insurance. If there's no signs of negligence, the insurance company will reject the claim or at least counter back that the guest was responsible due to his heavy weight. They'll go back and forth a couple times, the insurance company will settle for something outside of court, and life goes on.
Unless the owner were knowingly negligent, this is a non-issue. We can't round the corners of the world for everyone. If a person is obese, they have to accept some responsibility for how the world responds.
The DIY Landlord Book4.7248 Reviews - 3yLance MundoPro MemberInvestor · Newnan, GA · Member since 2020 · 26 posts · 8 votesI hope this works out for your and your investment. Can you explain the academic market further? What does it entail, and how would I look into renting in that market?
Quote from @Carolyn Fuller:
This happened to us this summer. A mother and her 13 year old son fly in on the red eye. That afternoon the mother crashed in the bedroom and her son crashed on the living room couch. A little later the son who was either totally asleep or close to it, got up and walked in the direction of where his bathroom at home would be. He opened the apartment door into our hallway and opened another door at the top of our basement. He then stepped into the air and fell down a flight of stairs.
It was terrifying. The poor mother slept right through the ordeal. I had to actually walk into the bedroom and shake her awake as my husband stayed with her son at the bottom of the basement stairs. I strongly encouraged the mother to take her son to the emergency room since he had hit his head as he went down the stairs. This meant an ambulance because none of us had a car. Thank god, he was deemed to be fine but we've been expecting to hear from their health insurance company. So far we haven't and hopefully, Airbnb or our insurance will cover it, if we do.
But now our insurance company won't renew our policies next year. It has been super difficult finding an insurance company that will cover us because we rent both on the STR market and the academic market. Evidently the combination makes us close to uninsurable!
- Cambridge, MA · Member since 2015 · 651 posts · 736 votes3yObviously this only works if your unit is in a college town. Cambridge is the most visiting scholar rich college town in the US. One of our units is between Harvard, M.I.T. and Boston University, within walking distance to all three. The other unit is within walking distance to Harvard and Lesley. We advertise on the university off-campus housing websites and Sabbatical Homes. Most of our tenants come through Sabbatical Homes.
We have detailed walk-through videos of both of our units (andWe also provide video conference calls with prospective tenants. The YouTube videos & conference calls really help tenants coming from overseas or cross country who are unable to visit the units in person before signing a lease.
We use DocuSign for lease signing. We use apartments.com for US rental payments and wise.com for international rental payments.
But unless you love visiting scholars for academic semesters and vacationing guests between, I wouldn't recommend this model, given the fact that finding insurance has been such a pain in the neck. We absolutely refuse to give up our academic tenants or our vacationers and insurance companies really, really do not like the combo.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Will your insurance get involved and help with lawyer fees?
- 3yLance MundoPro MemberInvestor · Newnan, GA · Member since 2020 · 26 posts · 8 votes
Thanks @Carolyn Fuller. Great information.
- 3yJeff CopelandBusiness MemberReal Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
This scenario stresses the need for:
1. Appropriate homeowner's insurance that covers your property for its current use (i.e. long term or short term rental) - There are a lot of properties out there that were converted from LTR to STR, or from primary residence to a rental, but the insurance coverages were never updated.
2. Maximizing the liability coverage on your homeowner's policy. Property and Casualty claims (roof damaged by a storm, floors damaged by a leak, etc) are usually in the tens of thousands of dollars. Liability claims (a person injured, permanently scarred, or killed on your property) are in the hundreds of thousands, and often exceed $1M in the case of a wrongful death. If the guy had fallen through the second story stairs and died, there is no doubt this would be a $1M+ lawsuit.
3. Having an umbrella liability policy. Homeowner's policies often cap liability coverage at $300k or $500k, which isn't enough for a wrongful death or serious injury claim. Most landlords also need a $1M to $2M umbrella policy that kicks in where your homeowner's policy taps out. It's a relative low cost "get out of jail free card" (monopoly reference only, not meaning actual jail time in most cases!) you can likely use only once, but could save you a million bucks.
Copeland Morgan LLC4.770 Reviews - Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes3y
Quote from @Dado Vucak:
@Collin H. Was this a property you own or just manage?
Insurance can cover the medical bills and repairs but what if they file a lawsuit? If it’s a property you own, I’m curious what you have in place for your asset protection.
Do you have the property in a LLC? Trust owning the LLC?
Good luck with everything and hopefully the individual that had the accident is doing okay.
Dado
Good questions. This isn't a property that we manage, but we have had several claims/lawsuits over the years with properties that we manage. Here is how it generally works:
1. If a guest is injured, they will often seek out a personal injury attorney that will file a lawsuit against the property owner, and likely the property manager.
2. Before the lawsuit is filed, however, the attorney will send a demand later requesting damages and offering negotiation to the property owner.
3. The property owner is the defendant, not the insurance company. This is an important distinction. The insurance company indemnifies (represents) the defendant (property owner).
4. The insurance company will conduct a full investigation of the incident. They will interview the plaintiff, the property owner, and very likely send representatives to view the property/site of the incident.
5. The insurance company then decides whether or not they are going to indemnify the property owner based on their own research and policy specifications.
6. Almost always, the insurer will negotiate a settlement before the case goes to trial.
In summary, it is good to have not only property insurance, but an umbrella policy, if the claim reaches into the millions of dollars (which it can if there is a disabling injury or death).But, just as important as good insurance, is good risk management of your property. All of the insurance in the world won't cover a claim if you are found to be grossly negligent. The insurance company won't pay, and the damages will fall to the property owner.
Buy good insurance. Look after your property.
- Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes3y
One other point of clarification:
An exhaustive guest waiver does not relieve the property owner of liability. That is a common misnomer. "I'll just write a really long disclaimer that I'm not responsible for anything." Won't work. Won't even come into play.
- Denver, CO · Member since 2018 · 127 posts · 97 votes3y
Does anyone know of any insurance agents that specialize in STRs that you can tag into this conversation?
I know my area requires $500K of liability insurance to cover issues like this but based on the conversation it sounds like this may not always apply as you would expect. This makes me wonder if there are any ways to mitigate this risk by (for example) thoroughly documenting the condition of your property and your efforts to maintain health and safety features?
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