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LIABILITY INSURANCE FOR RENTAL PROPERTY
Liability insurance for rental property provides financial protection for both parties to a lease, landlords and tenants alike, from most of the risks involved in owning, operating, or maintaining a premises for residential or commercial purposes. There are two aspects to liability insurance for rental property: there is that of the owner, and that related to the leaseholder. One, the owner's, is long term and very committed and substantial, while the other, the tenant's, is by definition temporary and limited in scope - these two aspects are a major factor in the cost of rental insurance.
The owner, operator, or resident of a rental space is responsible for the safety of all persons on the premises, and therefore, had liability for certain types of injuries or losses that might come to these persons, particularly if these injuries and losses that are not intentionally caused by the guest, leaseholder, or owner. The observation of standard maintenance and safety protocols is often adequate for preventing most injuries. Unforeseeable and uncontrollable events occur, however, and sometimes cause accidents which injure people, and which could endanger the financial status of owner or leaseholder, if neither were covered by liability insurance for rental property.
Insurance carriers, under the guidance of the Insurance Services Office, offer coverage at a reasonable premium that can mitigate many of the possible negative outcomes of such events for both the owner and the lessee. There is the tenant's policy, the HO-4, and the homeowners insurance policy in three forms, as well as a form specifically for rental property. They all include clauses of liability insurance for rental property.
Coverage for Owners and Tenants
The owner has the primary responsibility to maintain the property in a manner that is safe for the conduct of whatever use the premises are being put to, and therefore can also has liability for injuries related to poor maintenance of the house, loft, or commercial space. It must be maintained in such a way that it is safe for tenants and visitors. When a lease is written, it will stipulate which maintenance functions will remain with the owner and in which ones there will be a transfer of liability to the leaseholder.
However, the premises and the tenant's management must be overseen by the owner in his or her capacity as the person ultimately responsible for the premises. He or she could suffer a financial loss if the tenant is negligent and there is no policy of liability insurance for rental property.
The leaseholder would also be one of the parties held liable for damage, injury, or loss that occurs on rental premises. Rental property insurance does not normally cover other structures, so if the owner leases a house with a swimming pool to a family with children, both the leaseholder and the owner will have to be very careful to specify in the very clearest terms the liability that each has for the use of the pool.
If an apartment is rented to a college student, or condo is being leased to a senior citizen, the various liabilities of the unit owner, the condominium association, and the leaseholder must also be clearly delineated to indicate the responsibilities and liabilities for the common and public spaces, the personal possessions, and for accidents that occur inside the unit as opposed to in the elevator, to give a few examples.
Sometimes, it can be difficult to determine where the edges of each party's liability lie, but a strong liability insurance for rental property on all sides could help prevent a good deal of anguish. A responsible property owner will purchase liability insurance for rental property as financial protection against the risks peculiar to rental properties and will require that the leaseholder also obtain coverage.
Another couple of important factors that attach to properties that are being rented are worthy of note. Liability insurance for rental property can probably not cover every possible contingency. It is third party insurance, which means that the actions of others, the third parties, are an important factor in the occurrences and the responsibilities that may be allocated. Other people's actions are unforeseeable and uncontrollable and precisely because of this, they should be prepared for and guarded against as far as is possible.
Because liability insurance for rental property is always third party insurance, compensation is never paid to the first parties, that is, the policyholders. So intentional damage by the owner or leaseholder would not be covered in the respective policies, although they would each be eligible for willful damage caused to each other's property by the other. If the tenant willfully causes damage to the rental home making repairs necessary, the property holder will be entitled to claim damages, although the tenant would not be covered for malicious damage or for loss of use payments from the insurance carrier.