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Landlord Liability Insurance: Is there protection against claims?


In landlord-tenant disputes, landlord liability insurance can protect rental property owners from personal financial exposure for tenant claims. As Bay Area and California landlord-tenant attorneys, we see landlords with the wrong type of insurance coverage, leaving owners under-insured and exposed.

Understanding what landlord liability insurance does and does not cover

In many instances, landlords have a homeowners policy because they live in the building, or they previously lived there. In other cases, they have a minimal landlord-tenant policy that excludes common types of damages. For this reason, it’s important that landlords review their insurance to make sure it protects against certain claims, such as wrongful eviction damages, statutory damages and tenant attorney fees.

Statutory damages 

Renters have inherent rights, such as the right to habitable conditions and due process for evictions. Likewise, landlords have rights, such as timely rent payments and reimbursement for excessive property damage. To that end, many California landlord-tenant laws include statutory damages for violations of these rights. Correspondingly, in San Francisco and Oakland, the rent ordinances includes minimum statutory damages. Plus, the law allows for treble damages in certain situations, and awards the prevailing party attorney fees.

Punitive damages

In certain situations, a judge or jury may find a landlord has engaged in intentional misconduct which harms a tenant. To illustrate, a landlord may evict a tenant for the purpose of an owner move in, but does not move in. Instead, the landlord re-rents the property. Another common scenario is when a landlord fails or refuses to make needed repairs – especially when the city has ordered him or her to make such repairs.

In findings of misconduct, a judge or jury may award punitive or exemplary damages. This is to punish the landlord, and deter other landlords from engaging in similar behavior. 

Insurance does not cover punitive damages. Landlords must pay punitive damages out of their own pocket, and the costs are substantial. In addition, insurance policies don’t cover certain kinds of intentional acts – even if the judge or jury decides not to award punitive damages.

What types of protection can landlord liability insurance provide?

Below are some scenarios of how landlord liability insurance can protect a landlord owner against certain claims for damages.  

Wrongful eviction

Wrongful eviction is a common complaint in landlord-tenant disputes. For this reason, it’s essential that owners carefully follow state and local laws when evicting a tenant. Even with a sound reason, handling evictions incorrectly can lead to serious financial consequences. 

For example, a landlord may have to pay for moving expenses, lost income, and the increased housing cost of the tenant’s new rental. It’s often necessary to obtain special policy coverage (often called a personal injury endorsement) to address such claims. Even with such an endorsement, some policies exclude statutory/treble damage claims connected with the wrongful eviction. 

Breach of habitability 

If a tenant can show that a landlord failed to keep the property livable, the landlord may have to provide reimbursement for the repairs to make it safe and habitable. In addition, the landlord may have to refund overpaid rent, and pay for damages related to habitability issues. Some insurance policies specifically exclude this type of claim. 

Attorney Fees

If the policy at least partially covers the tenant’s claims, the insurance company should provide a qualified attorney, and cover the costs to defend the landlord against these claims. However, if the tenant wins the lawsuit, the tenant may recover at least some of their own attorney fees. If the case goes all the way through a jury trial, this can easily run into hundreds of thousands of dollars. Some insurance policies exclude any coverage for the tenant’s attorney fees.

Medical expenses

If a tenant complains of mold, asbestos, lead paint, or any other issues that make the dwelling uninhabitable, a landlord may be liable for medical expenses. 

Damaged personal property

If uninhabitable conditions cause damage to a tenant’s personal property, the landlord may be responsible for the repair or replacement cost of the damaged items.

Adequate landlord liability insurance is important

In the event of a legal dispute, it’s important for the owner to have the proper coverage to avoid financial loss. Insurance policies vary widely. For this reason, landlords should carefully read their policy documents to understand what their current policy covers and does not cover. Owners should always seek advice from a qualified professional if they have questions about insurance coverage. 

Steven Adair MacDonald & Partners has represented Northern California landlords and tenants for over 30 years. If you have questions, we can help. To schedule a consultation, please call 415-956-6488.

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