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5 Ways to Limit Your Personal Liability As a Landlord

Although holding on to property as a rental investment carries all sorts of benefits, including regular income and the anticipated continual increase in value of your holdings, it’s not without it’s difficulties. In theory the landlord/tenant relationship should be smooth sailing. You provide the property and agree to maintain it effectively, and they agree to pay rent on time and not to destroy anything. Regrettably, it doesn’t always work out this way. Small claims court sees more issues between landlords and their tenants than basically anything else, and millions of dollars in suits result from liability claims on a property. You’ve got to make sure you don’t fall prey to this fate, and that’s only possible if you take the steps to insure you cannot be sued. Here are five ways to limit your personal liability as a landlord.

First and foremost, make sure you carry sufficient liability insurance. This is the first line of defense between you and a desperate tenant looking to sue for damages. You’ll want to carry property and casualty insurance, which will cover you from natural disasters. You’ll also want general liability insurance, which will cover issues due to negligence. In addition, you might want flood insurance, or one of the other disaster-specific insurance products if you are in an area of the country where such a thing is a concern. Finally, picking up a commercial umbrella insurance policy will give you additional coverage to handle anything your other liability plans do not.

Even after you have such coverage, you won’t be completely out of the woods. Make sure that you also insure every employee hired who works on the property. That includes general contractors and repairmen, even if they’re only there for one day. Anyone who does any sort of work on the property should be able to provide you with written proof of insurance. First of all, it will insure you only work with established professionals, which means the job will get done correctly the first time. But it also means you’ll avoid any lawsuits coming from that direction as well.

Although it may pain some animal lovers, you might also want to consider having a no pets rule on your property. This will cause a bit of disappointment from potential renters, but not allowing tenants to permanently keep pets will cut out a ton of liability issues. You will get a better rate from insurance companies, as they are normally quite concerned with wrongful-death lawsuits that can come after a pet attack. You may not receive this level of coverage without paying an arm and a leg, which means those situations will come back to bite you, no pun intended.

It’s also a great idea to require renter’s insurance from all of your tenants. This is designed to protect them from property loss or damage, but including it as a requirement in your lease will double up the protection of your property. Most renter insurance policies also cover fires and personal injury damage claims along with the theft protection. So even if your tenant is negligent and it causes a problem, their insurance will step up first to handle payments.

Finally, consider going to an independent insurance agent with your business, as opposed to a large insurance company. The difference is that these private brokers can shop around and get you the best deal from a wide range of insurance carriers. With a large company you’ll have to buy all of your products from the same place. You may end up spending more on one or all of them than you would have if you shopped around. Gullands goes this route with their clients, and it always seems to pay off. Having the ability to pick and choose the best products from a wide variety of carriers will give you the best chance of saving money while remaining completely protected from liability.

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