One of your tenants was injured falling down the stairs and is now looking at you to pay medical bills. They are also hinting at a settlement for “pain and suffering.” Are you on the hook for thousands of dollars, or is the tenant just looking for an unjust payday?
This type of scenario could play out every day of the week, depending on how many rental units you own. There is the sidewalk slip and fall, the neighbor’s dog bite, the attack from a would-be home invader, the second-hand smoke health issues. The list can go on and on. Unless you know what you are liable for when it comes to tenant injures, you could find yourself writing a lot of checks.
Property Condition Liability
As a landlord, you are responsible for providing “habitable housing” for your tenants, the definition of which varies slightly by state and leaves some room for interpretation by the courts. At its most basic, habitable housing is free of obvious hazards. It has reliable heat and running water and a roof that protects the occupants from weather conditions and is reasonably secure from break-ins. Habitable housing also meets basic sanitary standards. It is not infested with rodents or bed bugs and is free of mold and other known health hazards.
Other property conditions could lead to tenant injuries that you could be liable for. These include:
• A staircase with no handrail
• Poor lighting in common areas
• Loose railings on decks and balconies
• Ripped or missing window screens
• Uneven surfaces on sidewalks or driveways
• Water leaks that could lead to mold
• Broken or missing smoke and CO detectors
If a personal injury results from hazardous conditions on your property, you could be held liable even if the condition is temporary. A landlord who is aware of a hazardous condition but does not resolve it in a timely manner can be at fault for resulting injuries. When it takes some time to accomplish the repairs, you are responsible for warning tenants of the existing hazard.
Other Personal Injury Liabilities
Part of maintaining habitable housing for your tenants is creating a safe environment. If you rent to a known criminal or hire one to work on your property and that person assaults one of your tenants, you could be held responsible. That example might be obvious, but some rental decisions you make may not be as clear-cut. Dog owners and smokers are two of the biggest hidden liabilities in rental housing.
Allowing pets in your rental property exposes you to potential liabilities. If someone is bitten by one of your tenants’ dogs, you could be responsible, at least in part, for damages. If you knew the dog might be a hazard, if you observed his aggressive behavior, or were aware he had bitten someone before, you could be liable. As the landlord you likely could become the target defendant, especially in instances where the tenant does not have insurance. Damages in a dog bite case can include medical bills, lost wages from time out of work, and costs associated with the emotional trauma of the event.
Your liability for injuries caused by smokers can be even more expensive. A smoker could accidentally set a fire in the building that injures other tenants. Second-hand smoke that seeps through vents and airshafts into other apartments can cause serious and debilitating health issues. A tenant who becomes ill or injured from another tenant’s smoking could hold you responsible for allowing a smoker to live in the building. The argument that you created the hazard and should have foreseen the inevitable injuries sometimes wins in court.
The Cost of Liability
Just one injured tenant could cost you thousands of dollars in medical bills. Even after you pay the bills, a tenant might sue you for lost wages and pain and suffering. The average dog bite claim costs $15,000 and the damages from a building fire could be much higher. Even though you are a conscientious landlord who takes property maintenance seriously, you could get stuck with legal fees to defend yourself against a personal injury claim.
Limiting Your Liability
You cannot eliminate your liability as a property owner and a landlord, but you can take some steps to reduce your exposure. Consider these ideas:
If you’ve recently purchased or renovated a building, consider hiring a home inspector to evaluate your property. A licensed inspector will identify potential hazards and hidden maintenance issues.
Follow up on that property inspection report by resolving all the issues it points out. Respond promptly to maintenance requests from tenants and keep your property in good repair.
Use a standard rental application to collect information about prospective tenants and permission for a background check. Run background checks and save all documentation in case you need to refer to it.
It’s okay to rent to pet owners if you take the proper precautions. Implement a strict pet policy and enforce the rules.
Establish a no-smoking policy in your rental units. Create a smoking area in common space where tenants and their guests can smoke. Be sure it is at least 25 feet from the building.
Be sure all rental units meet the standard in your area for smoke and CO detectors. Consider adding fire suppression systems, especially in kitchens, even if they are not required by code.
Require your tenants to get their own renters insurance policy. It is an inexpensive way for them to protect themselves and their belongings. If a tenant were injured on your property, renters insurance could cover some of their damages.
Your rental business will always face risk, no matter how carefully you run it. The right insurance coverage will help mitigate that risk and protect your business. As a landlord, you need coverage that goes beyond just property and fire. You need a policy that covers liability for personal injury to your tenants and your employees. Contact a local insurance agent who works with Millers Mutual Insurance to learn more about how a businessowners insurance policy (BOP) can protect you from unexpected risks.