Ward, Hayden

How Premises Losses Can Result in Severe Costs for Your Rental Business

premises loss for vacation rental properties

Did you know premises losses are the most costly and frequent landlord liability allegations?

The Bronx fire, one of the deadliest New York fires in decades, likely began with a faulty space heater. It was able to spread because the landlord allegedly failed to ensure safety doors were self-closing and smoke detectors were functioning. This allowed smoke to pour into the stairwell — the tenants’ only means of escape.

Unfortunately, losses alleging landlord negligence are not uncommon and can be quite costly, according to Advisen loss data. Read on to learn which types of landlord losses are most common and how to avoid them.

A Closer Look

Advisen’s loss database contains over 500 losses alleging similar types of landlord liability. Aside from smoke alarms, other landlord liability losses include allegations that landlords ignored apartment mold, leading to tenant illnesses, sidewalk defects and icy steps, as well as allegations that landlords failed to address lead paint, leading to lead poisoning in children, according to Advisen loss data.

Landlord Liability Losses by Type, Frequency

Looking at losses related to landlord liability, premises losses were the most frequent, accounting for 36% of total losses. These losses include negligence allegations such as those mentioned above.

Unintentional data disclosure was the second most common type of landlord liability loss. According to the data, these losses include data breaches, landlords who sent out mass emails containing tenants’ or employees’ personal information, failure to properly dispose of confidential documents and mailing confidential documents to the wrong tenant.

Landlord Liability Losses by Type, Severity

Premises losses account for the greatest severity of landlord liability losses, totaling $200 million, followed by breach of contract at $132 million, according to Advisen loss data.

Protect Your Rental Property with Landlord Insurance

To protect against the potential of costly losses, anyone considering renting out property should look into landlord insurance. At a base level, landlord’s insurance covers personal injury on the premises, physical damage and loss of rental income.

In addition to negligence, other landlord exposures include things they “should have known.” Dangerous pets, badly behaved tenants and dangerous property conditions fall into this category.

To avoid costly losses, landlords should keep a list of all complaints and repairs made on the property and inspect properties regularly to ensure debris, waste and flammable materials are properly disposed of. Landlords should also maintain safety equipment, including fire extinguishers, sprinkler systems and fire alarms; perform preventive maintenance on the property; and update plumbing, wiring and heating in accordance with applicable building codes.

To learn more about protecting your rental business through CBIZ, request a free quote.

This blog may contain scenarios that are provided as examples only. Coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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About Us

CBIZ Vacation Rental Insurance, a division of CBIZ Insurance Services,Inc., is the largest insurer of short-term vacation rental properties in the United States. As part of an $850 million New York Stock Exchange traded company (CBZ), we are the first broker to develop specific policy coverage to meet the needs for vacation rental properties and the amenities offered by these businesses. We have insured vacation rental properties since 2002.

The CBIZ Vacation Rental Insurance team knows insurance, specifically the risks and exposures related to short-term vacation rentals.We won't confuse you with technical "insurance speak" ~ our representatives are well versed in explaining your coverage in plain English. With hands-on, personal customer service, we guarantee swift communication and a 24/7 claims team that is ready to respond to your call any time of the day. As specialist in the industry, we leverage our knowledge and passion to ensure you and your business are adequately protected.