Most investors, like you, are well aware that liability coverage is important but that doesn’t mean they understand why. Investors always need to remember that you are ultimately responsible for whatever goes on in the houses that you own. If you have a tenant that owns a dog that you are aware of and that dog bites someone, the family will try to go after that renter but chances are they won’t be able to sue them due to lack of assets. Who do you think they will come after next? You! The family will hire an attorney that will claim that you knew that there was a dangerous dog on the premises and you allowed it.
Read more about cases like this: http://www.animallaw.info/articles/ddusdogbite.htm
Most landlord policies will cover $500,000 in liability but dog bite lawsuits can settle for millions depending on the severity. Most investors say “Oh I’m covered, I have an LLC.” I tell them, talk to an attorney, there are so many loopholes to get around that and get to your assets. Another common liability claim for landlords has to do with pools. The worst claim I’ve ever heard was about a drowning. Two college student were renting out a house with a pool and one night when they were intoxicated one of them fell in the pool, hit his head and passed away. The lawsuit ended in the landlord having to pay out $1,100,000. The reason for this is the landlord should have never rented out a house with a pool in the first place – sounds absurd right? That’s the point I want to get across, people sue for ridiculous, backwards reasons. You need to have good insurance to protect yourself against these opportunists.
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