Property owners have a legal responsibility to ensure the safety of both invited and uninvited visitors. However, many investors fail to fully comprehend which type of liability policy is the right choice for their investment business. Use this guide to confidently explain the differences between a Personal and a Premises Liability policy to your investor clients.
What is Personal Liability Insurance?
Personal liability insurance protects individuals from claims resulting from injuries or damages they may cause to others. It is commonly included in homeowners insurance policies, and covers incidents like:
- A guest slipping on an icy driveway at an owner-occupied home
- Accidentally damaging someone else’s property
- Dog bites or other related injuries to another party caused by the owner-occupant’s pet
When discussing with your clients, it may help to explicitly state: “This coverage is intended to protect you, not your property or operations as a business owner, landlord, etc. It reflects your personal responsibility in causing harm.”
What is Premises Liability Insurance?
On the other hand, premises liability insurance is tied to incidents that may occur at a specific location, typically a rental or investment property. It protects property owners from claims of injury on the premises due to unsafe conditions. Examples may include:
- A tenant or guest tripping over broken steps
- A delivery driver injured by falling on an icy driveway
- A public utility worker on the property injured due to poor lighting
When discussing with your clients, emphasize that this coverage is a must-have for landlords and real estate investors who are responsible for maintaining safe conditions on their properties.
Does Personal Liability Insurance Cover Rental Property Owners?
NO. A personal liability policy does not extend to a person’s responsibilities as a rental property owner. For those exposures to be covered, they would need a premises liability policy.
Does Premises Liability Insurance Cover Rental Property Owners?
YES. Premises Liability is designed to protect non-owner-occupied property owners. REInsurePro’s Premises Liability includes coverage for:
- Payment of bodily injury or property damage for which an investor is legally obliged to pay
- Medical expenses for the injured party
- Carbon monoxide pollution
- A sublimit for canine liability to protect investors in case of damages caused by a dog on their property
- Defense costs such as counsel, court fees, and judgements
In addition to a Property and Liability coverage package, REInsurePro also offers liability-only coverage for real estate investors. You cannot overstate the importance of investors carrying at least a premises liability policy for any property they own.
What Are the Differences Between Premises and Personal Liability?
| Aspect | Personal Liability | Premises Liability |
| Who/What Coverage Is Designed For | Owner-occupied homes (the owner resides in the home as their primary residence) | Non-owner-occupied properties (rentals, flips, vacant, under renovation, etc.) |
| Primary Purpose | Protects the owner and others who live in the home against personal negligence at their primary residence or off-premises incidents | Protects the property owner/landlord from claims of injury or damage arising out of the ownership, maintenance, or use of the property |
| Example of Coverage | A guest slips and falls at a property owner’s personal residence | A tenant or guest is injured due to property conditions (broken railing, cracked walkway, loose deck boards, etc.) |
| Coverage Location | Limited to personal residences and personal activities | Applies specifically to the insured and any additional insureds with liability exposure related to the rental, vacant, or renovation property |
| Tenant Injuries | Not covered – tenants are not considered guests | Covered for injuries to tenants or their guests caused by conditions at the property when owner liability is determined |
| Business Use Consideration | Homeowners policies exclude business pursuits, which can include renting a property for income | Recognizes rental activity as an exposure and provides appropriate liability coverage |
| Coverage Gaps for Investors | No protection for claims arising from rental activity or investment property ownership | Coverage tailored to non-owner-occupied risks |
| Best Suited For | Primary homeowners with no rental or investment activity on the premises | Landlords and real estate investors of tenant-occupied, vacant, renovation, or new construction properties |
Real-World Scenarios
It may help your clients to understand these differences through real life examples:
Personal Liability Example
“You accidentally knocked over a neighbor’s expensive sculpture while visiting their home. Your personal liability insurance would cover the damage.”
Premises Liability Example
“A tenant falls down stairs due to a loose handrail at your rental property and sues you for negligence. Your premises liability insurance would respond.”
How Much Premises Liability Insurance Do I Need?
REInsurePro recommends investors maintain premises liability limits at no less than $1 million per occurrence, $2 million aggregate, but higher limits are available as well.
Real Estate Investors and Landlords NEED Premises Liability Coverage
Educated clients are happier clients! Take the time to explain the nuances of a Personal vs Premises Liability policy. Not only will it help them avoid the pitfalls of inadequate coverage, but it also gives them the confidence to know their investments are properly protected by an insurance expert!
