Don’t Let One Lawsuit Wipe Out Your Rental Income

When it comes to rental investments, where properties are filled with residents, visitors, and daily activities, one mistake can trigger a string of financial problems. That’s where general liability coverage comes in as your secret weapon.

As a real estate investor, you may already have property insurance, but general liability is the specialized protection that shields you from third-party claims.

Here, we’ll explore why this coverage is crucial for rental property owners and why property management companies like Henderson Properties make it a non-negotiable requirement.

Why General Liability Coverage Is Important

Imagine this: A tenant’s guest slips on an icy walkway during winter, or a faulty handrail gives way, leading to an injury. These aren’t rare hypotheticals; they’re everyday risks in rental properties.

General Liability insurance is designed to cover claims from third parties (like tenants, guests, or even delivery personnel) for bodily injury, property damage, or personal injury that occurs on your rental property.

Here’s why it’s a game-changer for investors:

1. Financial Protection Against Lawsuits: Without liability coverage, a single lawsuit could wipe out your profits or even dip into your personal assets. This insurance typically covers legal defense costs, settlements, and judgments up to your policy limits, often starting at $1 million per occurrence. In an era where litigation is common, this safeguard ensures that a tenant’s claim for medical bills or lost wages doesn’t derail your investment portfolio.
2. Coverage for Common Risks: Rental properties come with unique exposures. Think slip-and-fall accidents in common areas, dog bites if pets are allowed, or even accusations of slander during tenant disputes. General Liability policies often include “premises liability,” which addresses these scenarios, helping you avoid tens or hundreds of thousands of dollars.
3. Peace of Mind and Business Continuity: As an investor, your goal is growth, not constant worry. With this coverage, you can focus on scaling your portfolio knowing that unexpected incidents won’t force you to sell assets or declare bankruptcy.

Why Property Management Companies Require It

Henderson Properties manages everything from tenant screenings and maintenance to evictions and rent collection, placing us at the forefront of potential liabilities. Essentially, property management companies view general liability as a collaborative protection: it safeguards everyone involved, from the owner to the property management team to the tenants, fostering a safe rental environment.

That’s why Henderson Properties must be listed as an Additional Insured on your policy, not just an Additional Interest, as these two terms are often confused.

Here’s why we, and most reputable property management firms, mandate this coverage:

• Compliance with Contracts and Industry Standards: Most management agreements include clauses stipulating minimum limits – typically $1 million or more – to align with industry best practices. This requirement stems from the need to comply with local laws, lender stipulations (if your property is mortgaged), and our own insurance providers.
• Enhancing Professionalism and Tenant Safety: Reputable management firms prioritize safe, well-maintained properties to attract quality tenants and reduce turnover. Requiring liability coverage reinforces a commitment to responsibility, ensuring that any incidents are handled swiftly and professionally.

Don’t Leave Your Investments Exposed

As real estate investors, you are in the business of building wealth, not courting disasters. General Liability coverage is your first line of defense against the unpredictable, offering robust protection that keeps your rental(s) profitable and your mind at ease.

If you do not presently have the coverage Henderson Properties lists, we encourage you to speak with your provider.

For your convenience, Henderson Properties partners with Surevestor to offer $500,000 in General Liability coverage for just $15/month. This affordable protection can help safeguard your rental investment from unexpected risks. Contact us to learn more!