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When landlords think about insurance, they often think first about the building.

What happens if there is a fire? A major storm? Water damage?

Those are important risks. But there is another side of landlord insurance that can be just as important:

Liability.

As a landlord, you own a property that tenants, visitors, delivery people, contractors and others may use or visit. If someone is injured or someone else’s property is damaged and you are found legally responsible, the financial consequences can be significant.

How significant? There is no standard cost for a liability claim. A relatively minor property damage claim might involve thousands or tens of thousands of dollars. A serious injury can result in hundreds of thousands of dollars in damages, lost income, future care and other costs. In particularly severe cases, the financial exposure can be much higher.

Legal costs can also add substantially to the overall expense of defending a claim, even before the question of damages is settled.

That is one reason liability insurance limits are often measured in the millions of dollars. The purpose is to help protect you against covered legal defence costs and amounts you may become legally responsible to pay, subject to the terms and limits of your policy.

For a landlord, that protection matters. A serious liability claim has the potential to put more than the rental property at risk. It can create a significant financial obligation for the property owner personally.

What Is Landlord Liability Insurance?

Landlord liability insurance can help protect you if you are held legally responsible for bodily injury or property damage connected to your rental property.

Depending on the circumstances and your policy, it may help cover legal defence costs and damages for a covered claim, subject to the terms and limits of your insurance.

And you do not need to own a large apartment building to have liability exposure.

It can exist whether you rent:

• A single-family home
• A condo
• A basement apartment
• A duplex
• A multi-unit property
• Several rental properties

5 Potential Liability Risks

Liability can arise in many different ways when you own a rental property. An accident or property damage does not automatically mean a landlord is responsible, but if someone is injured or their property is damaged and the landlord is found legally liable, the financial consequences can be significant. Understanding where these risks can arise can help landlords take reasonable steps to prevent problems and make sure they have appropriate liability coverage in place.

Here are five potential liability risks landlords should understand.

1. Slips, Trips and Falls

A tenant, visitor, delivery person or contractor could be injured because of ice, snow, uneven walkways, damaged stairs, poor lighting or another hazard at the property. If the landlord is found legally responsible for the unsafe condition, a liability claim could follow.

For example, a delivery driver could trip on a loose or broken step while dropping off a package and suffer a serious injury. If the landlord is found responsible for not reasonably addressing the hazard, a liability claim could follow.

In Newfoundland and Labrador and Nova Scotia, there are plenty of conditions that can contribute to a fall, including:

• Icy or snow-covered steps
• Slippery walkways
• Uneven pavement
• Damaged stairs
• Loose handrails
• Wet entranceways
• Poor lighting
• Uneven flooring
• Clutter or hazards in common areas
• Damaged steps, decks or porches

The person injured does not have to be your tenant.

It could be a friend visiting your tenant, a courier delivering a package, a contractor working at the property or someone else legitimately on the premises.

What Can Landlords Do?

Regularly inspect:

• Exterior steps
• Walkways
• Driveways
• Stairs
• Handrails
• Decks
• Entrances
• Common areas
• Exterior lighting

During winter, make sure there is a clear understanding of who is responsible for snow and ice removal and that the work is actually being done.

If you know about a hazard, do not ignore it.

2. Fire, Carbon Monoxide and Electrical Injuries

A fire, carbon monoxide incident or electrical hazard can cause serious injury. Liability may become an issue if the landlord is alleged to have failed to properly maintain heating, electrical or safety systems.

One example would be a faulty electrical outlet that causes a fire and injures a tenant. If the issue had been reported previously and was not repaired, the landlord could potentially face a liability claim.

Potential concerns can include:

• Faulty wiring
• Damaged electrical outlets
• Unsafe heating equipment
• Improperly installed appliances
• Oil-fired equipment
• Wood stoves
• Chimneys
• Missing or poorly maintained smoke alarms
• Missing or poorly maintained carbon monoxide alarms

Older rental properties may deserve particular attention because some building systems may not have been updated for many years.

Landlords should understand the condition of the property’s:

• Electrical system
• Heating system
• Oil tank, where applicable
• Wood-burning appliances
• Chimney
• Smoke alarms
• Carbon monoxide alarms

A fire or carbon monoxide event does not automatically mean the landlord is liable.

But if someone is injured and it is alleged that the landlord failed to maintain a required safety system or address a known hazard, liability could become an issue.

3. Water or Fire Damage to Someone Else’s Property

A burst pipe, leak or fire can damage a tenant’s belongings, another rental unit or a neighbouring property. If the landlord is found legally responsible for the cause of the damage, they could face a liability claim.

Consider, for example, a leaking pipe in an upstairs unit that is not repaired and eventually causes significant water damage to the tenant’s belongings and the apartment below. If the landlord is found responsible for failing to address the problem, liability could become part of the claim.

Other situations could include:

• A plumbing leak damages a tenant’s belongings
• Water from an upstairs unit damages the unit below
• A leak in a condo damages a neighbouring unit
• A fire spreads to another part of a multi-unit property
• A fire damages an adjoining property

Whether the landlord is legally responsible will depend on what happened.

For example, a sudden pipe failure may be very different from a leak that was reported repeatedly and never repaired.

The same principle applies to fire.

A fire occurring at a rental property does not automatically make the landlord liable for damage to others. The circumstances and cause matter.

Reduce the Risk

Landlords can help reduce the likelihood of these losses by:

• Repairing leaks promptly
• Maintaining plumbing and heating systems
• Checking water heaters
• Inspecting vacant units
• Addressing roof and drainage problems
• Making it easy for tenants to report problems
• Making sure tenants know where water shut-off valves are located, where appropriate

A tenant’s own insurance may also be relevant when their belongings or liability are involved.

4. Injuries During Repairs or Renovations

Renovation work can create temporary hazards such as exposed wiring, construction materials, open work areas or unsafe access. A tenant, visitor or other person injured because of those conditions could potentially bring a claim against the landlord.

For instance, a tenant’s guest might trip over construction materials left in a common entrance during renovations and be injured. If the work area was not properly secured or marked, the landlord could potentially face a liability claim.

Rental properties frequently require work, such as:

• Plumbing repairs
• Electrical work
• Roofing
• New flooring
• Deck repairs
• Kitchen or bathroom renovations
• Painting
• Landscaping
• Structural work

While the work is underway, new hazards can be introduced.

A tenant might trip over construction materials. A visitor might enter an inadequately secured work area. Temporary stairs or access points may not be as safe as the normal entrance.

For larger projects, there can also be additional insurance considerations.

What Can Landlords Do?

• Use qualified contractors
• Ask contractors about their own liability insurance
• Keep work areas appropriately secured
• Make sure tenants understand any temporary access changes
• Remove hazards promptly
• Tell your insurance broker about significant renovations or changes to the property

The insurance arranged for a fully occupied rental property may not necessarily be appropriate during a major renovation.

5. Injuries Caused by Structural or Exterior Property Hazards

A failing deck, damaged balcony, loose exterior fixture, falling ice or another structural problem can cause serious injury. Liability may arise if the landlord knew, or reasonably should have known, about the hazard and failed to address it.

Another example is a weakened deck railing that gives way while a tenant is leaning against it, causing the tenant to fall. If the railing had deteriorated and the landlord knew, or reasonably should have known, that it needed repair, a liability claim could follow.

Other potential hazards can include:

• A deck or balcony failure
• Loose or deteriorated railings
• Falling siding or exterior material
• Falling snow or ice
• Damaged porches
• Structural deterioration
• Loose overhead fixtures
• Retaining wall failure
• Unsafe exterior stairs

Atlantic Canadian weather can be tough on buildings.

Wind, rain, freezing temperatures, snow and repeated freeze-thaw cycles can accelerate deterioration.

A deck that looked fine several years ago may have weakened boards or supports today. A railing can loosen. Concrete steps can crack. Ice can build up above entrances.

Make Exterior Checks Part of Regular Maintenance

Look for:

• Rot
• Rust
• Cracked concrete
• Loose fasteners
• Movement in railings
• Damaged steps
• Loose exterior materials
• Deteriorating decks or balconies
• Ice buildup
• Drainage problems

Identifying and repairing these issues early can help prevent an injury in the first place.

Why Maintenance Matters to Landlord Liability

A maintenance issue by itself is not necessarily a liability claim.

Something generally has to happen, such as a person being injured or someone else’s property being damaged.

But maintenance can be important in determining whether a landlord is found responsible.

For example, a loose railing may simply be a maintenance problem.

If it is not repaired and someone falls because the railing fails, it could become a liability issue.

Similarly, a leaking pipe may start as a repair issue.

If the leak is ignored and eventually damages someone else’s property, liability could potentially become part of the claim.

That is why landlords should take reported problems seriously and address hazards promptly.

Keep Good Records

Documentation can also be valuable.

Consider keeping records of:

• Property inspections
• Tenant maintenance requests
• Repairs
• Contractor invoices
• Photographs
• Heating system servicing
• Roof work
• Electrical work
• Plumbing work
• Snow-clearing arrangements
• Major renovations

Good records help you keep track of the property and can also show what steps were taken to address a problem.

What About Snow and Ice?

For landlords in Newfoundland and Labrador and Nova Scotia, snow and ice deserve particular attention.

Winter conditions can change quickly.

A walkway that was clear in the morning can be icy by evening. Snow can accumulate on stairs. Freeze-thaw cycles can create black ice. Snow or ice can also fall from a roof or overhang.

Landlords should understand who is responsible for winter maintenance at each property and make sure appropriate arrangements are in place.

Depending on the property and rental arrangement, snow clearing may involve the landlord, tenant or a contractor.

From a risk-management perspective, what matters is that the responsibility is clear and the work actually gets done.

Does Tenant Insurance Matter?

Yes.

Your landlord insurance and your tenant’s insurance serve different purposes.

Your landlord insurance is designed to protect your interests as the property owner.

Tenant insurance can protect your tenant’s:

• Personal belongings
• Personal liability
• Additional living expenses following certain insured losses

A tenant’s liability coverage can become relevant if the tenant accidentally causes damage and is found legally responsible.

For example, a tenant might accidentally cause:

• A kitchen fire
• Water damage
• Damage to another unit
• Injury to another person

The circumstances and insurance policies involved will determine how a claim is handled.

This is one reason many landlords encourage or require tenants to carry tenant insurance.

How Much Liability Insurance Should a Landlord Have?

There is no single liability limit that is right for every landlord.

The appropriate amount can depend on factors such as:

• Type of property
• Number of rental units
• Number of properties you own
• Value of your assets
• Overall liability exposure

A landlord with one rental home may have different needs from someone who owns several multi-unit properties.

Talk to your insurance broker about the liability limit on your policy and whether it remains appropriate as your rental portfolio grows.

Insurance Doesn’t Replace Good Property Management

Liability insurance is important.

But preventing an accident is always better than dealing with a claim afterward.

Some of the simplest risk-management steps can also be the most effective:

Inspect Your Property

Do not rely entirely on tenants to identify every problem.

Respond to Maintenance Requests

Make it easy for tenants to report problems and act on important issues promptly.

Keep Records

Document inspections, repairs, contractor work and important communications.

Pay Attention to Seasonal Risks

Prepare for snow, ice, freezing temperatures, storms and heavy rain.

Use Qualified Contractors

Especially for electrical, plumbing, heating, structural and other specialized work.

Review Your Insurance

Make sure your insurer knows how the property is being used and that your liability coverage remains appropriate.

The Bottom Line: Protect More Than the Building

Your rental property may be a valuable asset, but the building itself is only part of what you need to protect.

As a landlord, you may also face liability if someone is injured or someone else’s property is damaged and you are found legally responsible.

Five important risks to keep in mind are:

1. Slips, trips and falls
2. Fire, carbon monoxide and electrical injuries
3. Water or fire damage to someone else’s property
4. Injuries during repairs or renovations
5. Injuries caused by structural or exterior property hazards

Good maintenance can reduce these risks.

Good documentation can help you stay organized.

And the right landlord insurance can provide important financial protection if something still goes wrong.

Protect Your Property and Your Liability With Local Insurance Experts

Whether you own one rental property or a growing portfolio, Munn Insurance can help you understand the risks you face and the insurance available to protect you.

Our local insurance experts work with landlords throughout Newfoundland and Labrador and Nova Scotia. We can help you understand your liability coverage and find landlord insurance that fits your property and your situation.

Get a landlord insurance quote today.

Visit: munninsurance.com/landlord-insurance-program/
Call: 1-855-726-8627

Protect the property. Protect the income. Protect yourself.