If not, your savings and assets may be at risk. Owning rental property and buildings is a lucrative way for an individual to build equity, but can be a huge liability.

Commercial Real Estate owners and investors are percieved to have deep pockets and need high liability limits to match those perceptions. Property owners should strongly consider carrying liability limits of at least $1,000,000 per occurrence for each location to protect their assets in the event of a large claim. When a large claim occurs defense costs and legal obligations can add up quickly. Having liability coverage in place will prove to be valuable if a lawsuit occurs.  While you may believe that your insurance premium is costly, the price difference to increase your liability limit may be less than what you would expect. Relative to the cost of a large claim, the premium will seem minor.

On most standard package policies an occurrence limit of $2,000,000 is an option. Review your policy and evaluate the limits that are available to you. Your liability limits are shown as: per occurrence limit/ general aggregate limit. For example your policy may show $1,000,000 per occurrence/ $2,000,000 general aggregate. Meaning you have up to $1,000,000 per accident or occurrence and up to $2,000,000 of liability coverage available during the policy period.

Sometimes the policy limits provided by your standard policy  may not be enough. So what happens when your liability limits have been exhausted?

If the liability limits of your package policy are not high enough for a large claim you could end up paying the difference out of your pocket or worst, losing the assets that you have worked hard to obtain.Your wages, homes, personal property, rental property and other assets are put at risk. This is where an umbrella or excess liability policy becomes important.

An umbrella or excess liability policy is additional liability coverage for your insurance policy in case the primary limits have been exhausted. Many investors own multiple properties and/or have a high net worth. Purchasing an umbrella policy can be used as a way to further protect their financial investments.

The extra money you spend may be what protects your future operations.

Think of all the losses that can occur at your rental property:

  • Carbon Monoxide Poisoning
  • A Slip and Fall Accident
  • An attractive nuisance
  • A dog bite
  • A pool accident
  • A personal injury claim(important as a real estate owner.) Covers offenses such as wrongful eviction from and wrongful entry into.

At KBK, we can look at multiple real estate insurance companies and make comparisons of what a fair premium is. This is one of the many advantages of working with KBK Insurance agency.