Liability Insurance Limits

Whether you are a seasoned investor or purchasing your first property, your liability exposures are higher now than they were prior to this endeavor. There are two ways people decide to invest: as individuals and hold deed in personal names or in some form of business entity. Whichever path you decide to take, limits of liability need to be one of your highest concerns.

If you are purchasing or have purchased properties in your personal name, my recommendation to investors is to first max out the liability limits available to you on your landlord policy and second to add an umbrella policy. Many times I come across landlord policies that carry $100k in liability thinking it will improve the cash flow. However, would you believe me when I say to increase to $500k can be as little as $15 a year?! A little more than a single dollar per month can give you 5x the liability coverage. 

I stress liability limits, especially for individually held properties, primarily because you are putting your personal assets at risk. To reduce the risk of losing these assets, it pays to buy as much liability insurance as possible. I don't know about you but I would rather not have a tenant owning my property(or properties) or dipping in to my income stream because I was liable for a loss and didn't have high enough limits to cover the loss.

As for folks purchasing property in an entity, there are still exposures to what assets are owned by the entity but for the most part your personal assets aren't exposed. To reiterate, costs to increase liability limits and even add excess liability coverage are low in comparison. 

All this to say, we want to make sure that our assets are adequately protected. Make sure you visit with your insurance advisor to properly assess your risk exposure and have sufficient liability coverage in place so that if it hits the fan, you can rest assured you have done the leg work to protect yourself.

Some scenarios that could play out where liability insurance is involved:

-Tenant Injury(poor maintenance issues, landlord negligence)

-Invasion of Privacy

-Discrimination

-Personal Injury

-And many others

Again, consult your agent to ensure you are properly protected. To learn more, visit https://jtpins.com/business-insurance/landlord-insurance.