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Property Owners' Liability Insurance Explained
If a tenant, visitor or member of the public on your property is injured or their property is damaged, they may claim compensation from you—the owner of the property. Property owners' liability insurance covers the cost to defend against such a claim and pays any compensation awarded to the person making the claim.
For homeowners, this protection is typically embedded into your buildings insurance policy. Landlords should ensure this property owners' protection in part of their landlord insurance policy. For businesses, these types of claims can be covered by public liability insurance.
Property Owners' Liability Meaning
Property owners' liability means that the owner of a property (e.g., an individual or business) can be held liable if a member of the public is injured or their property damaged whilst on the property. Or in some other way related to the property. In that case the member of the public can sue the property owner for damages for which they're liable.
Property Owners' Liability Claims Examples
- A property owner has not fixed a loose tile on a step up to the front door. A visitor to the property loses their footing on the tile and falls down the stairs, seriously injuring themselves. They sue the property owner for damages.
- There is a poorly maintained tree with some dead branches at the front edge of a property. During a wind storm one of the dead branches falls onto a car below, causing significant damage. The car owners sues the property owner.
- A gas explosion results in both personal injury to a tenant and damage to their property. The tenant sues their landlord (the property owner) for damages.
What Does Property Owners' Liability Cover
Property owners' liability covers personal injury, illness or property damage to a third party that is caused by or linked to a property—injury, illness or damage for which the owner of a property may be liable. It covers both legal defence costs and any compensatory damage the owner is found liable to pay.
Difference between Public Liability and Property Owners' Liability
The difference between public liability and property owners' liability is essentially in the policyholders. Public liability insurance is generally bought by a business (e.g., sole trader, partnership or limited company) while property owners' liability insurance would be purchased by private property owner such as a landlord (or it will be part of a homeowners' building insurance policy). Property owners' liability insurance is basically a type of public liability insurance in that they both cover injuries, illnesses or property damage to third parties. This could be customers, vendors or passers-by in the case of a business, or tenants or visitors to a property in the case of a landlord.
Is public liability insurance the same as property owners' liability?
Public liability insurance and property owners' liability both cover illness, injury or damage to third parties. However, while public liability would be bought by business, property owners' insurance would be bought by a landlord or other private property owner.
Do I Need Property Owners' Liability Cover?
Property owners' liability is not required by law. But if you have a mortgage it may be a requirement of your contract. And even when not required, property owners' liability cover is obviously a sensible protection to buy. Personal injury or property damage claims can result in significant awards, and without insurance a property owner would be liable to cover any such award themselves. This could even put the property at risk if the owner did not have sufficient funds to cover any compensatory award.
Property owners' liability is relatively cheap, all things considered, so if you own a property then this type of cover is a usually considered to be a very sensible addition to help you manage the risk of property ownership. We don't know any property owners without it. And property owners' insurance is a critical component of most commercial property insurance and residential landlord insurance policies.