Written by William Paull
Co-Founder & Account Director
On this page
How does a property owner get drawn into a tenant's injury claim?
The claim often reaches the owner months after the injury, once the injured person's lawyer has found who owns the building. Being named does not mean you will be found liable.
You bought the building, leased it to a business and left the running of it to them. You were not there the day someone was hurt. You may not have been on site for years. None of that, on its own, keeps your name off a claim. A lease hands your tenant the floor, and the risks of owning the building stay with you.
When someone is hurt, their lawyer looks for everyone who might share the blame, and a title search can tell them who owns the building. A court can split a payout between every party who shares some of the responsibility, so some of it can land on you when it was your tenant who ran the place.
Doesn't my tenant already have insurance for this?
Your tenant's policy is bought to protect their business. On some of the policies we place, it also insures the landlord, but only where the lease requires it and only for claims arising from the tenancy. It is not set up around your liability as the building's owner.
Being noted on your tenant's policy as an interested party is a different thing from being insured by it. The note records your interest in the building. It does not promise to pay a claim made against you.
Where the lease does make your tenant insure you, their policy still has to hold up on the day. It has to be in force. The tenant has to have told their insurer the truth when they bought or renewed it. And it has to respond for the entity that owns your building. You control none of that.
Your own policy has to name whoever you need it to protect: a company, a trust or you personally. For a trust or super fund, the trustee's role is part of that check. We take the names from how the building is owned.
You may already hold this cover. On the wordings we place, a landlord's business pack, such as a commercial landlords policy, has a liability section that can answer for you. It does so only where the schedule, the page of the policy listing what you insured, describes you as letting or owning the building.
What in my building am I responsible for, and what is my tenant's?
As a rough guide, the owner's duty tends to sit with the structure and the safety features built in before anyone leased it, and the tenant's with running the place day to day. Common areas such as car parks and stairwells usually stay with the owner either way.
The test is who could have prevented what went wrong. Who pays in the end turns on the facts of each claim. A problem built into the building tends to be the owner's, because the owner controlled it before the lease began. Think of a missing handrail, a structural defect, or a safety feature that was never installed properly. A problem with how the business runs tends to be the tenant's, because the tenant runs the floor. That covers a spill left unmopped, or stock blocking a walkway.
Shared spaces are where owners get caught. Tenants and their customers use the car park, the foyer and the shared stairwell every day. The owner is usually the one expected to maintain and light them, as the only party who controls the whole building.
If I'm drawn in, what could it cost me?
Even if the injured person sues only your tenant, you can be asked to pay a share of the payout. Defending yourself costs money on top.
A claim does not have to name you to reach you, because your tenant can come back to you for a share. In one published court case, a building's owners had leased premises to a gym. A patron fell on an internal staircase that had never had a handrail, a defect from a renovation the owners carried out before they leased the space. The patron sued the gym alone. The gym then sought a contribution from the owners for that defect. The court ordered the owners to pay half of the payout.
The other cost is the defence. On a covered claim, a property owners liability policy pays the compensation you are found liable for and the cost of defending the claim. On most of the policies we place, that defence is paid on top of your limit. Most also promise to defend a covered claim even when the allegations against you are groundless.
Your own property owners liability policy meets both. When you set its limit, first check who your lease is talking about. A liability limit required of your tenant does not tell you how much cover you need as the owner. We look at your own obligations, the building and its use when recommending your limit. What a landlord's liability cover costs is set out in our commercial landlord insurance cost guide.
Are some buildings more exposed to this than others?
Yes. An empty building and a strata lot can both raise an owner's exposure, on top of the shared areas above.
An empty building feels safer because fewer people use it. It often works the other way. A hazard that staff or customers would point out in a tenanted building can sit unnoticed for weeks in an empty one.
A strata lot is exposed in its own way. Whether the body corporate's policy protects you as the lot owner depends on that policy. Some extend liability cover to lot owners and some exclude it. Before recommending extra cover, we compare the scheme's policy with your own and check whether you are protected as the owner. Where there is a gap, it is answered by a policy in your own name.
FAQ
Can I be sued for something that happens on my property even if I did nothing wrong?
Yes. A claim can name you before anyone has decided who was at fault. Doing nothing wrong is a defence you still have to argue, and arguing it takes a lawyer. On most of the policies we place, the cost of defending a covered claim is paid on top of your limit. At Consolidated Insurance Brokers, we explain how yours treats it.
Does it matter if the building was vacant when someone was injured?
Yes. With no one on site to report a hazard, finding it falls to you. Inspect the building regularly and fix a defect once you know of it, because a defect you knew about and left unfixed can leave a claim without cover.