What Is Landlord Liability Insurance?

Landlord liability insurance is a type of insurance coverage that protects landlords in case someone gets hurt on their rental property.

Key takeaways

• Although there’s no legal requirement to own landlord liability insurance, it offers valuable coverage.
• Coverage in landlord liability insurance isn’t included in all landlord insurance policies (DP-1 and DP-2), so you may need to add it.
• The cost of a landlord liability policy depends on the size of the property, its value, its age, the tenancy period, and the environmental risks of the location.

What is landlord liability insurance?

Renting one of your properties to tenants or vacationers can be a great way to earn passive income, but it’s also a lot of responsibility. Though your tenants might handle day-to-day property maintenance, as an owner, you’re responsible for overseeing the property’s safety and functionality. 

That’s why landlord insurance can be helpful. If you have a mortgage on the property, your lender may require that you obtain landlord insurance. This type of insurance often covers the structure of the home and may include liability coverage, which can protect you in the event that a guest, tenant, or third party sues you for property damage or bodily injury that occurred on your property.

Is landlord liability insurance required?

While you’re not legally obligated to acquire a landlord insurance policy, landlord liability insurance is highly recommended. Landlord liability insurance can protect you from the crippling financial impact of a lawsuit against you.

Why do you need landlord liability insurance?

It’s a good idea to invest in landlord liability insurance since it helps protect you from paying out of pocket in a lot of situations. 

Liability insurance for a rental property can help a landlord in several ways. For example, if the rental property has defective flooring that causes a tenant to trip and fall, resulting in a severe injury. In this case, you’re liable for the accident since you failed to maintain the property. 

That’s when your landlord liability insurance would kick in, providing you with the coverage you need to cover legal expenses and ensure your tenant gets proper medical care. 

Landlord liability insurance coverage

There are three primary situations that landlord liability insurance will cover. 

• Injury to a tenant or guest: If you’re found liable for any damage caused to either a tenant or a guest. 
• Legal defense: You need to pay legal expenses in case a tenant sues you. 
• Property: If you are liable for property damage caused by a break-in due to poorly-installed locks or other incidents of negligence. 

These are some of the scenarios, but there are other instances where landlord liability insurance coverage can come in handy, ensuring peace of mind when renting out your property.

Landlord liability insurance is essential as it’s easy to get sued for anything these days. You could be in serious financial jeopardy if a jury decides that you could have done more to protect your tenants or their guests. 

Liability coverage is included in a DP-3 policy, but you will need it to include it on a DP-1 or DP-2 policy, leading to various pricing depending on the limits and peril basis of the coverage.

How much landlord liability insurance do I need?

Landlord insurance typically costs 15-25% more than your typical homeowners insurance policy. The average homeowners insurance policy costs $1,680 per year. The following factors will determine how much liability insurance you need for a rental property, 

• Size and value of your property
• The age of your property
• Tenancy period
• Potential environmental and natural risks

Curious to know more about property insurance policies? Get a 60-second homeowner insurance quote from us and take the next step!

Still have questions?

How is renter’s insurance different from landlord insurance?

Renter’s insurance is obtained by a tenant who wishes to have protection for their personal property and belongings. On the other hand, landlord insurance is purchased by a landlord in case of any property damage or a tenant injury.

How much liability insurance should I select for a rental property?

It depends on the size and value of your property, among several other factors. You can get in touch with our Hippo experts for a quote.

Why should I opt for a DP-3 policy?

DP-3 insurance policies provide coverage for a broader range of perils than the DP-1 or DP-2 policies. In all instances, you should confirm that you have liability coverage added.  

Do landlords need liability insurance?

While it’s not required by law to have liability insurance, it is necessary to properly protect your assets if someone makes a claim against you.