Is it Covered? Dog & Animal Limitations

While your investor client’s Property Coverage protects damage that happens to their investment property, (i.e. the physical building), your client’s Liability Coverage protects their financial well-being associated with that property (i.e. if their negligence at that property were to harm someone else). Property policies intended for investment properties usually exclude Wear-and-Tear due to animal nesting or infestation, while General Liability policies for their property will often have limitations on the coverage offered for dogs and other animals, such as injuries due to dog bites. 

What type of damage is excluded?

As mentioned, Wear-and-Tear caused by animal nesting and infestation is typically excluded in most property policies. This may include anything from squirrels or birds taking up residence in the attic, to termite damage, to the secretions left behind by cockroaches and other insects.  

As for injuries that an animal on the premises may cause, like a tenant’s dog, there are often total exclusions or limited coverage for those injuries within the General Liability policy. Though an injury to the animal itself may be covered by a tenant’s own pet health insurance policy, it is possible that the investor may be held responsible if a tenant’s dog bites someone. Coverage for that injury may or may not be included in the investor’s policy. Investors should check their own policy for coverage exclusions.  

What your investor client needs to know about dog bites as a landlord:

Landlord liability for dog bites is different in each state. In some states if an investor knows a dangerous dog is maintained on their rental property, they can be held liable for any incidents involving that dog. Different lists have been compiled that include breeds of dogs that account for a high frequency of dog bites and the amount of damage the dog could inflict. Lastly, any dog, not properly socialized or put into a situation where the dog feels threatened, may react by biting. 

What does the technical lingo for this exclusion look like in the investor client’s policy?

Sample policy language may look like this: 

Wear-and-Tear to the Building Itself: 

“We will not pay for loss or damage caused by or resulting from any of the following: 

Wear-and-Tear: 

Nesting or infestation, or discharge or release of waste products or secretions, by insects, birds, rodents, or other animals.” 

Limited Liability Coverage for Injuries Caused by Animals: 

“The coverage under this Policy does not apply to “bodily injury”, “property damage”, “personal injury”, “advertising injury”, or any injury, loss or damage arising out of or caused by any animal, birds, reptiles, or insects regardless of whether owned by you, in your care, or on your premises. Provided, however, that this Policy provides a sublimit of $25,000 per occurrence and in the aggregate for bodily injury caused directly by a dog bite on your premises, whether or not the dog is owned by you or in your care.” 

*As insurance policies may vary, investors should check their own policy for language specific to the covered property. 

What can this type of damage cost the investor?

One of the most common pets can also be one of the riskiest. According to the Centers for Disease Control and Prevention, 4.5 million people suffer dog bites each year, with about 900,000 requiring medical treatment! Furthermore, the Insurance Information Institute reported that in 2018, about one third of all homeowner’s policy claims were due to dog bites and other dog-related injuries. The average cost per claim was a whopping $39,000.  

Investors might think that they should not be liable for the actions of a dog that is owned by their tenant, but Landlord liability for dog bites is different in each state. If your client is held responsible for an injury that isn’t covered by insurance, it could easily cost them their business. Not to mention the impact that it could have on their personal, financial, or emotional well-being. Keep in mind that dogs aren’t the only animals that can cause injuries or physical damage to a property. As most investors are aware, cat urine can be one of the most difficult things to remediate in a property. 

What can investors do to protect themselves from issues with animals?

First, they should know what is in their policy. It is important that investors read the sections of their insurance policy that address Wear-and-Tear caused by animals and any exclusions or limitations to coverage regarding animals. They should know both what they are and are not covered for. If you and your investor client don’t understand something or have questions, don’t hesitate to contact your Sales Manager who would be happy to help you! 

Investors should require their tenants to carry renters insurance in the lease and enforce it.  Investors should inform their tenants of any insurance they carry on the property as it does not apply to tenants’ personal belongings (or pets!). Your client should impress upon tenants the importance of reporting any hazardous conditions on the property or any incidents involving an animal to the property owner or property manager immediately. The investor will want to include a section in the lease where the tenant acknowledges their understanding of these items and the penalty for breaking this section of the lease. 

Investors should be proactive when it comes to routine maintenance. During regular inspections, investors should check for any animal “invasions” including nests, debris and waste created by insects, birds, rodents, or other animals. It is important they stay on top of repairs before animals have a chance to damage the structural integrity of their property or become a health hazard to a tenant. 

Investors may consider not allowing pets or limiting the types of animals allowed at properties.  It may seem like they are being a killjoy by not allowing pets on their property, but investors must carefully consider the risks versus the rewards. Pets are great, but if the risk of injury or potential property damage outweighs the benefit to their tenant, it may not be worth the chance. On the other hand, if they do decide to allow dogs, cats or other furry, feathered, or scaly creatures, it is always wise to meet the pet before accepting that potential tenant. Investors can set up a short visit with their prospective tenant to meet the pet in their current environment. They will also gain valuable information about how they keep their current home! 

Either way, investors should be very specific in their lease:  If they decide to allow pets at their property, they should be very specific as to what types, how many and any additional cost associated with keeping a pet on the premises. If investors don’t allow pets, that should be spelled out clearly. In either case, investors should thoroughly review the entire lease with their future tenant and have them initial by those items to signify that they understand the terms of the lease….and then be sure to enforce it!