Realty Times      Real Estate News and Advice  
July 18, 2005   

Search Realty Times

Agent Locator
Contact Us
Preferred Vendors

Who Else Wants To Get Rich In Real Estate?

WAIT! Are you still buying leads?

Local Market Conditions

News & Advice > Buyers' Advice
Landlord Beware: Advice to Protect You and Your Investment
by Phoebe Chongchua

Do you dream of being a landlord and collecting a paycheck every month, basically making money while you sleep? Sounds like a great way to get paid. However, being a landlord can also bring a lot of liability issues, but taking the right precautions may keep you out of the courtroom.

"It's a higher risk to own a tenant-occupied property," says Mary Eblen, owner of Allstate Insurance Company in Encintas, Calif.

Often neither the landlord nor the tenant is carrying the right amount of insurance. According to a survey by Agents and & Brokers of America, nearly two-thirds of those living in United States rental properties do not have renter's insurance.

Eblen says when you become a landlord taking vital precautions are a must. Top of her list is to make sure that as a rental property owner, you have a landlord policy rather than a homeowner's policy for your rental.

"The landlord's policy really protects you for issues such as, let's say, there were a fire. If there were a fire the tenant obviously couldn't live there any more and couldn't pay rent, so the landlord's policy would pay fair loss of rent. In other words, if it took six months for the home to be fixed due to the fire, the policy would pay six month's rent until the tenant could get back in," explains Eblen.

The landlord policy package covers not only the dwelling but also things such as if the tenant sues the landlord and loss of rent for certain incidents, such as the example just mentioned.

When you're a property rental owner it's not just the tenant that poses a liability to you. Landlords face liability risks from several other factors such as uninsured or under-insured repairmen working on the property, aggressive animals and occurrences from slip and fall accidents to the tenant or guests.

Eblen says landlords "need to make sure they have the adequate liability limits ... .They're not there everyday and the odds of something happening at the property are higher [than if they were]."

Here are five pointers to consider if you're going to be a landlord:

  1. Have a property management firm screen your tenants

Hiring an expert can be less time consuming and very helpful. Property management firms have a working daily knowledge of running credit reports and background checks on tenants.

  1. Require that your tenants have renter's insurance

Only less than a quarter of renters actually have renters' insurance. Eblen says if that number were higher there might be fewer problems. She points to a case where the landlord was sued because of the tenant's aggressive dog.

"A delivery man dropped off a package and was bitten by the tenant's dog. The tenant had no money and no assets and the tenant did not have renter's insurance. So the delivery person had to sue the owner for his injuries due to the dog bite," says Eblen.

  1. Make sure your property is protected for vandalism due to the tenant not taking care of the rental correctly

  2. Make sure you have insurance that covers you for fair rental loss

  3. Make sure you have adequate limits of liability

It's critical to protect not only the rental, but also other assets, "because a tenant or a tenant's guests, if they were to trip and fall or anything like that, they may come after not only that property but also may come after the rest of the assets that the owner may have," says Eblen.

When looking for insurance keep in mind that policy terms need to be carefully examined and compared as coverage and eligibility requirements vary. Eblen suggests carrying coverage for: general liability, property and excess or "umbrella" excess liability protections.

Being a landlord can provide a lucrative income, but just like with any job, knowledge and protection keep you in business.

Published: July 18, 2005

Related Articles:

  • Home Improvement Booming Industry: Fueled by Housing Turnover and Natural Disasters
  • Under the Boardwalk: Grass, Sand, Gravel All Fine Terrain for Rollout Walkway
  • New Loan Program For First-time Homebuyers
  • How Important Is Title Insurance?
  • Study Finds Least And Most Affordable Housing Markets

    Phoebe has nearly 20 years of experience in the broadcast and print industries. She is a realtor with The Guiltinan Group and is a real estate reporter for The Coast News in San Diego, California. Phoebe worked for KGTV/10News in San Diego as a Newscaster, Reporter and Community Affairs Specialist for more than a decade. Today, Phoebe writes, sells and speaks on real estate. Visit her web site: or call: 858.259.3646 or email her at for more information.

    Copyright © 2005 Realty Times®. All Rights Reserved.

  • Phoebe Chongchua
    Columnist Phoebe Chongchua

    Realty Times Television
    Weekends on Satellite Television

    Mortgage Rates

    30 Year Fixed: 5.66%

    15 Year Fixed: 5.25%

    1 Year Adj: 4.39%

    Today's Headlines

  • Housing Counsel: When Your Seller Lies

  • Landlord Beware: Advice to Protect You and Your Investment

  • Today's Local Market Conditions

  • New Research: Homebuyer "Preapproval" Letters Often Virtually Worthless

  • The Rader House and Investment Ethics

  • Warwick, Rhode Island, Known For Oceanfront, Shopping, Quality Of Life, Say Realtors

    Today's Insider REALTOR Secret

    Mortgage Lenders Brokers
    Who Else Wants To Get Rich In Real Estate?
    Agent Marketing | Local Market Conditions | News & Advice | About Realty Times
    Site Map | Article Index | Terms & Conditions | Privacy | Contact Us | Credits