Ever wondered whether you need a separate property owners liability cover? Whether you operate in the commercial or domestic industry, landlords often question the necessity of having their own landlord liability cover, believing that their tenants’ insurance or strata complex insurance suffices. However, the reality is not as simple, understanding the implications of not having separate property owners liability coverage is important.
For example, when an injury occurs on your property, legal teams will immediately investigate and identify all potential parties to sue. This means that even if your tenants or your strata complex have insurance, once you are named in a court notice as owning the property, you will need to have a dedicated policy to protect your assets.
We will discuss what tenants and strata insurance policies can cover and what the legal repercussions might be of not having an appropriate property owners liability cover.
What is Strata Insurance
Strata insurance helps body corporate committees in a wide variety of industries protect their assets. However, while strata insurance policies can protect the body corporate against potential lawsuits, they typically only cover common areas and the building’s exterior. Unfortunately, they often do not cover individual units or specific liabilities associated with them, leaving you exposed to risks related to your unit or commercial space.
What is Tenant Insurance
Tenant insurance, also referred to as renters insurance, usually covers the tenants liability for the business they operate within the leased premises. Even though your interests as the landlord can be mentioned in these policies, it doesn’t automatically guarantee indemnification.
Relying solely on the tenant’s insurance exposes you, as the landlord, to significant risks. For example, is the policy actually in force and paid for? Did the tenant let the cover lapse? Has the tenant correctly disclosed their own information and set up a valid policy in the first place? A tenant’s business liability is far more complex than a landlord liability cover which can protect you comprehensively, easily and affordably.
Another potential risk is when your tenant is suing you because they are injured. Even if you set up a policy in joint names to protect you, the policy will not generally respond to protect against one insured suing the other under the same policy unless you have specifically requested and incorporated a cross-liability clause. For the hassle and expertise required to organise this type of cover, you are better off setting up a simple policy yourself.
Example
We have seen claims where someone tripped in the car park whilst visiting the tenant’s shop. Solicitors proceeded to send notices to the body corporate, the tenant and the landlord. The contribution notices named the trust entity of the landlord and neither the tenant’s insurer nor the body corporate policy responded to protect the landlord’s entity.
Fortunately the landlord had a basic liability policy in place to protect their entity. There was no real reason they should have been liable as they had no control over what happened. Having a basic Commercial Property Owners Liability policy protected them from having to defend themselves because they were named in the action. The landlord’s insurer negotiated with both the tenant’s and the strata insurer, providing a settlement to make the matter go away.
In this example, having a basic liability policy specifically for the landlord protected them from having to defend themselves unnecessarily.
Conclusion
Separate property owners liability coverage is essential to protect yourself and your assets from unforeseen liabilities and legal actions. Relying solely on tenants’ or strata insurance can leave you exposed to risks which a landlord liability policy can easily mitigate.
Consolidated Insurance Brokers (CIB) can help you find the best liability policy whether it is commercial property insurance covers or public liability insurance. We will provide the support and expertise needed to navigate the complexities of landlord liability insurance.
