Many people assume that pools, trampolines, and other outdoor recreational equipment sitting in the yard are included in their standard insurance policy. Some people also assume that if a person is injured while using this outdoor equipment, coverage will be available to help reimburse any medical expenses. In truth, policies can vary quite a bit on this topic. Some may include these items while many will choose to exclude them as they are considered attractive nuisances. It is important for investor clients to understand the coverage level of their insurance policy for outdoor and recreational equipment.
What types of damage could be excluded?
There are two main types of damage that could be excluded:
Property Damage
- One of the investor client’s trees falling on their tenant’s jungle gym in the backyard.
- Tree roots damaging an in-ground pool.
- An in-ground pool lifting out of the ground after a long period of heavy rains.
While some policies may offer coverage for this damage, many will often exclude damage to pools. Coverage for a pool may be offered, but typically only as an additional, limited coverage and at an additional cost.
Bodily Injury
In insurance, bodily injury is defined as “any type of injury, sickness, or disease sustained by a person, including death” resulting from the use of the investor’s pool or outdoor equipment.
- A broken tailbone caused by a slip and fall on the investor’s pool deck.
- A broken arm caused by a fall from the swing on the investor’s jungle gym.
Could the investor client be held responsible for an injury that occurs on playground equipment owned by their tenant?
Hopefully, a tenant wouldn’t sue the property owner for an injury that occurs while their child is playing on equipment that they own. However, it is possible that the investor ends up getting tangled in a lawsuit if a guest or trespasser is injured on that same equipment because the investor allowed it on the premises. Even if the investor isn’t found to be negligent, they may end up with legal fees from having to prove their innocence. Insurance policies can include clauses that remove their responsibility to defend the investor, for example: “Where there is no coverage under this policy, there is no duty to defend.”
What happens when someone trespassing on the property is injured in connection to the investor client’s in-ground pool?
Sample policy language may look like this:
Exclusions Regarding Injuries or Damage to Others’ Property
General Pool Exclusion
“We” do not pay for “bodily injury” or “property damage” liability arising out of the ownership, maintenance (including damage arising from the discharge or spillage of chemicals used), operation or use of any swimming pool.”
Swimming Pool Exclusion and Limitation
“No coverage is provided under this policy for Bodily Injury arising from the insured’s ownership of a swimming pool that is unfenced and/or not in compliance with the city or state laws or safety requirements. The limit of liability that is applicable to any claim or suit brought against an insured relating to swimming pools is $25,000 including all expenses and defense costs.”
Trampoline and Similar Equipment Exclusion
“…this Policy does not apply to “bodily injury”, “property damage”, “personal injury”, “advertising injury”, disease or illness including death resulting from such disease or illness, alleged disease or illness, or any other damages for past, present, or future claims arising in whole or in part, directly or indirectly out of the use of a trampoline or inflatable device.”
Damage to Property
“This insurance does not apply to…”Property damage” to:
(1) Property you own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another’s property;
(2) Property loaned to you
(3) Personal property in the care, custody or control of the insured
Exclusions Regarding Physical Damage to the Equipment Itself
Earth Movement
“We will not pay for loss or damage caused by… earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.”
Water
“We will not pay for loss or damage caused by… water under the ground surface pressing on, or flowing or seeping through:
- Foundations, walls, floors or paved surfaces;
Outdoor Fixtures and Furniture Exclusion
“…this Policy does not insure any loss or damage, cost or expense or any increase in insured loss, damage cost or expense which arises from loss or damage to outdoor furniture or fixtures, whether or not directly or indirectly caused by or resulting from any peril otherwise insured under this Policy.”
*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 client?
While the cost of a jungle gym or trampoline can range from a couple of hundred dollars to a couple thousand, estimates for a new in-ground pool can range from $20,000 to $80,000 according to HomeAdvisor. Physical damage to a pool can cost the investor up to $2,500 in repairs or, worst case scenario, the cost of a complete replacement. A more costly expense is if someone is injured. A pool or play equipment can pose risks ranging from a sprained ankle to broken bones, paralysis, or even death.
How can investors protect themselves?
Here are some tips for the investor client:
- Know what is in the property’s insurance policy: Investors should read the sections of their insurance policy that address pools and other outdoor equipment. It is important that the investors know what they are and are not covered for. If your client doesn’t understand something or has questions, let them know they shouldn’t hesitate to contact you, the agent!
- Consult legal counsel regarding “attractive nuisances” on the property: Investors need to know what they are legally responsible for regarding protecting third parties from being injured on their property and take the appropriate measures to abide by those laws. Investors must remember commercial properties (apartments) often have different pool regulations than single-family homes.
- If tenants are allowed to install an above-ground pool or keep play equipment, investors shouldn’t be shy about checking the condition during regular maintenance checks: It may seem a little odd to tenants that the investor wants to check the condition of their jungle gym, but it’s as simple as letting the tenant know that it is a stipulation of them keeping that equipment on the premises. Tenants will be happy to know that the property owner cares about the safety of their family and what happens on the property.
- Consider not having pools or allowing other types of play equipment on the property: It may be a bit of a damper to not allow play equipment on the property, but investors must carefully consider the risks versus the rewards. Amenities are great, but if the risk of injury outweighs the benefit to the tenant, it may not be worth the chance.
- Either way, the lease should be very specific: If pools and outdoor equipment are allowed at the property, the lease should be very specific as to how they are to be used and who is responsible for upkeep. If these items are not allowed, it ought to be spelled out clearly. In either case, the entire lease needs to be thoroughly reviewed with future tenants and the investor should require tenants to initial by those items to signify that they understand the terms of the lease….and then be sure the lease is enforced!
