What Liability Coverage Should Landlords Have?
Learn how liability protection works for rental properties and how much coverage is enough
Owning a rental property means more than maintaining bricks and mortar. It also means accepting the legal risks that come with having tenants, guests, and service providers on your property. If someone slips on icy steps, is injured by a faulty railing, or claims your negligence caused a fire, you could be held financially responsible.
This matters when accidents happen—and they do. You might think about this the next time a tenant calls with a maintenance concern or you’re renewing your landlord insurance policy.
What Landlord Liability Insurance Covers
Landlord liability coverage protects you from the cost of legal claims, settlements, or medical bills when someone is injured or their property is damaged because of something that happened at your rental.
Key situations include:
-
A tenant’s guest trips on a loose stair and breaks a wrist
-
A leaking pipe damages a neighbouring unit’s ceiling
-
Poor lighting or snow buildup leads to a fall on your rental’s walkway
-
A fire in your rental unit damages surrounding properties
Coverage typically includes:
-
Legal defense costs whether or not you're found liable
-
Court-awarded damages or negotiated settlements
-
Medical payments to third parties injured on your rental property
Tip: Liability insurance does not cover intentional harm, tenant disputes over rent or evictions, or issues caused by illegal activity on the premises.
How Much Coverage Do You Need?
Most landlord policies start with $1 million in liability coverage, but in many cases, that amount may not be enough—especially in urban or multi-unit settings. Consider increasing your limit to $2 million or more if:
-
Your property has shared spaces like hallways or parking lots
-
You rent to multiple tenants or families
-
You own property in a high-cost area where lawsuits could demand more
-
You frequently hire contractors or property managers
| Property Type | Minimum Recommended Liability Limit |
|---|---|
| Single-family rental | $1 million |
| Basement suite in owner’s home | $1 to $2 million |
| Duplex or small multi-unit | $2 million |
| Condo rental | $1 million (plus umbrella if needed) |
Caution: If a serious injury or fire occurs and your liability limit is too low, you’ll be responsible for any excess damages out of pocket. A small premium increase now can protect your long-term financial stability.
Liability Protection Anchors Your Policy
Property coverage protects the building, but liability coverage protects your future. Without it, one unfortunate incident could lead to thousands—or even millions—of dollars in claims. Whether you’re renting out a single suite or managing multiple units, proper liability protection is one of the most critical parts of your landlord insurance.