Why Landlords Need Liability Insurance
by Janet Portman
Q: I manage a single-family home for an out-of-state owner. A branch from a tree on the front lawn fell on the tenant’s car, which was properly parked in the driveway. The owner’s insurance carrier refused to pay for the damage to the tenant’s car, claiming no damage was done to the actual home. So, the tenant had the work done on her own, and filed a claim with her car insurance company, who paid the bill ($3,000) except for the $1,000 deductible. She wants the owner to cover the deductible, and I agree. What do you think? –Will G.
A: At the bottom of all this is whether the owner is responsible for the damage to the tenant’s car. Even if the tree was well-trimmed, and the branch broke off unexpectedly, the answer is yes. Most of the time, when something on the rental property over which the landlord has control — be it the front steps or a tree — damages a tenant’s property or injures a tenant doing something she has a right to do, the landlord will be responsible. That’s why business-savvy landlords and all property owners have landlord liability insurance, which kicks in when people on their property (such as tenants, guests, prospects and delivery persons) suffer accidental injury or damage. If the owner doesn’t have landlord liability insurance, the owner will be personally responsible.
You might check with your owner about what kinds of insurance he carries. It sounds like he may have only property insurance (which covers only damage to the structure), but no landlord liability coverage. If that’s so, but if he does have an ounce of sense, he’ll pay the tenant for the $1,000 deductible and pray that it all ends there. That’s because the tenant’s car insurance company has the right to go after a third party (in this case, the owner) who causes damage to its insured that the company has paid for. The landlord could find himself being sued by the car insurance company for $2,000, and another $1,000 by the tenant if he’s been stubborn enough to refuse to cover her deductible.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at firstname.lastname@example.org.
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Copyright 2008 Janet Portman
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