Statistical probability of being sued?

Question

Anyone have a credible link to the statistics for major and non major landlord law suits?

What is the probability of being sued for a major incident that could wipe you out or cause significant losses?

What is the probability of being sued for everyday minor items like deposit disputes, etc.?

Jeff B. · Answer

As you are finding, that data is near impossible to find...

IMO, the behavior of the landlord AND the tenants are leading indicators of this risk.

Jack B. · Answer

I am not even looking for that specific/localized data, just generalized. What you are suggesting is a statistical analysis of law suits specific to an area, factoring in the population size and sample size.

I'm just trying to get a general idea of what, even at a national rate, the statistical probability is that a landlord will be sued. I would take the mean of national numbers over a purely localized mean as I expand to other markets. I've googled a bit but did not find any data, let alone credible data.

If I had the raw numbers of 1 and 2 I could calculate the p myself, I'm trying to get the p to use in EMV and to a lesser extent, utility function calculations.

Heck if there were raw data with multiple categorical and numerical variables I would conduct multiple regression analysis. But at this point I just want to do EMV calculations.

Jeff B. · Answer

@Jack B.  A conservative approach to Risk Management is a probability of 1.0 -- certainty.  Listening to those in denial of a DOS invocation, the probability is nil, but that advice is cheap as those saying it have nothing at risk.

Playing the game with you, you would need to know:

• number of landlords in the given area
• number of law suites in that same area (unqualified as to reasons)

and calc the Area probability as item2 / item1

Don't think it's reasonable to expect to find either datum.

Jack B. · Answer

That's not correct at all. The estimated monetary value is NOT the dollar amount of assets at risk. It's a mathematical equation that is calculated using the dollar value of the assets at risk in conjunction with the statistical probability of outcome x. THAT would be the estimated monetary value. I think I'm on the wrong forum for deep math questions...

No one is trying to decide between anything here, I just asked a simple question and got a bunch of wrong definitions of EMV...

David Dachtera · Answer

@Jack B.,

I'll say what I tell anyone who's looking to weigh the value of doing or not doing (whatever):

How much money can you AFFORD to "save"?

The "estimated monetary value" is the total value of the assets at risk. Assume that in case of a legal challenge you could lose it all.

If you're o.k. with that, make sure your partners, stakeholders, etc. agree with you.

CAN it happen? Certainly.

WILL it happen? Who knows ...

Are you a gambler or an investor?

John Mocker · Answer

Jack,

As Agents, we do not see the back round data that the companies use to create their rates.  I'm sure they use that info or similar info but they don't release it.   You might try any Building/Rental trade associations.  They may also collect data and may be more willing to provide it.

Jack B. · Answer

I don't intend to, I'm just trying to find out the statistical probability to determine risk for calculating estimated monetary value.

John Mocker · Answer

Jack,

I don't have the stats but have seen both types of disputes.   If you are considering going without Liability coverage I would recommend against it.  Even if the property is in an LLC or corportation, there is always the possibility that the claimant could pierce the veil of the LLC/corp.    I would speak to an Attorney familiar with Rental properties.