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While most landlord insurance policies include liability coverage, there are limits to the amount you are covered. Though it varies by policy, standard rental policies are often capped at $500,000 of liability coverage or less. That may sound like a lot of money, but the reality is lawsuits can add up and landlords are at a greater risk of being sued. In fact, in May of this year one Portland tenant won a $20 million lawsuit against his landlord for safety hazards. So how can landlords who own multiple properties fully protect their assets? This is where umbrella policies come into play.
An umbrella policy offers liability protection beyond your standard dwelling policy with the simplest policies starting at an extra $1 million in coverage. Even though umbrella policies can be considered “worst-case scenario” coverage, think of it this way. How great is your net worth and how much do you want protected?
In addition to the added financial protection, umbrella policies offer an extra layer of claims coverage that are generally excluded from standard policies including libel (written false statement damaging to a person’s reputation- watch out for social media!), slander (spoken false statement damaging to a person’s reputation), and mental anguish (a high degree of emotional pain, distress, or suffering that is a direct result of a traumatic event). Plus, umbrella policies cover personal circumstances outside of your rental properties, such as your dog biting someone at the park.
Umbrella policies clearly are a good option for landlords and offer additional peace of mind. We always recommend consulting professionals to find what is right for you. For more information on landlord insurance, see our comprehensive overview of landlord insurance, Landlord Insurance: The Ultimate Guide.