If you’re looking for a good way to layer your liability coverage for yourself and your property, an umbrella policy is something to think about. Although it may not cover all types of liability, depending on the policy, many landlords are looking into umbrella policies to cover their rental properties as well as their personal needs. However, before considering an umbrella policy for his properties, a landlord should first understand what they are and what they do and do not cover.
What is an umbrella policy?
In layman’s terms, an umbrella policy, also known as excess liability policies, is a type of coverage that supplements an existing policy in your home, person, or automobile. Liability insurance is a type of coverage that protects you if you are found to be at fault for bodily harm or injury or property damage. Umbrella policies are extensions to existing standard policies that cover a maximum limit, with many starting at a minimum of $1 million. Another benefit of umbrella policies is that they cover a broader range of expenses, such as legal fees.
This is especially important for landlords because most rental property laws hold the landlord responsible for the health and safety of the tenants who live on his property. If something goes wrong on the rental property, it is usually the landlord’s responsibility to deal with it. If the tenants are damaged or injured and the landlord is found to be at fault, an umbrella policy can mean the difference between financial ruin and stability in a lawsuit. Some scenarios include a former tenant breaking into the property because they still have access to it through a key or squatters who live in an empty house and cause damage. Landlords are responsible if someone was hurt while exercising in a gym on the property or if loose handrails or improperly installed stairs cause a fall injury. Even a minor injury can result in extensive medical bills.
What an umbrella policy does or does not cover
Most standard umbrella policies do not cover liabilities incurred on the commercial or professional property. As a result, if you operate your rental properties through an LLC, you may be unable to find an umbrella policy that covers them. You’ll need to look into regular business insurance. However, some insurance companies will provide a separate business umbrella policy in addition to your existing business insurance. If you manage multiple rental properties or locations, this is usually a good idea. The amount of coverage you will require will be determined by your existing assets. The more money you stand to lose, the more liability insurance you should have.
If you are able to, you should obtain an umbrella policy that will cover all of your assets that may be sought in court. Umbrella policies are genuinely low-cost at the beginning range of $1 million in coverage but can increase in cost as you get up to five or ten million in coverage. To put it simply, if you have a lot of assets to your name, an umbrella policy may be a wise choice. It is unquestionably a good idea for landlords