Tenants Legal Liability Coverage
What Does Tenants Legal Liability Coverage Mean?
Tenant’s legal liability coverage is insurance that protects against loss or damage to a property resulting from the actions of a person renting space at that property.
When purchased by the tenant, this insurance covers the cost of loss or damage caused by the tenant. This differs from a tenant’s content insurance, which covers the tenant’s own possessions within their unit.
Tenants should be informed that, while the landlord may have liability insurance, it may not be sufficient to protect the tenant against claims made by the landlord’s insurer. Additional tenant liability coverage is often needed to provide proper protection against claims by the landlord’s insurer.
Tenants renting space—whether residential, commercial, or business—may cause accidents that result in property damage, such as a fire. Property owners may hold tenants liable for any damage caused by such accidents and may file legal claims against them. However, if the tenant has legal liability coverage, they will be protected from these claims, even if they were not directly responsible for the accident (e.g. if an employee of the rented office accidentally starts a fire).
Tenant’s legal liability coverage may be written to only cover losses caused by the tenant and specific perils such as fire, smoke, explosions (limited), and leakage from fire protection equipment. Alternatively, broader coverage may be obtained for all risks, subject to a deductible.
Insuranceopedia Explains Tenants Legal Liability Coverage
Often, you will find Tenant’s Legal Liability coverage included in commercial general liability policies. Alternatively, you can purchase Tenant’s Legal Liability coverage as a separate policy.
This coverage protects the landlord (or building owner) if you or one of your employees cause damage to the premises you are renting. For example, if you rent a storefront for your new business, your landlord will likely require you to have some form of Tenant’s Legal Liability coverage.
This coverage will apply if you or one of your employees causes damage to the rented property. In such a case, you may be legally responsible for the damage, but this liability coverage will pay for the claim, protecting you from having to pay out of pocket.
The policy also covers incidents involving bodily injury. For example, if a customer trips over boxes you are unpacking in the store and your business is found legally liable for their injury, this coverage will provide compensation to the third party while they are on your property.
However, intentional damage, wrongful acts, or claims related to your physical assets (such as computers or office furniture) are not covered by Tenant’s Legal Liability. These may be covered under a Commercial Property Insurance policy as part of your business’s contents coverage.
