One of the most likely risks you will encounter as a landlord or property manager is not fire, tornado, hurricane, or personal injury. It is a Fair Housing complaint being made against you. It might be legitimate, because you were not aware of some of the rules. It might be bogus and merely used as leverage by an unhappy tenant or prospect. If fake, you are looking at a minimum of $15,000 in legal fees and lost rent just to get it thrown out. If real, legal fees and damages can be very large.
Sadly, most landlords are not aware that their insurance policy does not cover them for this. One person suggested their umbrella policy would, but that is not accurate. Umbrella policies don’t add extra risks. They just add more dollars to the limits of your other policies.
In the industry, what you want to obtain is called Tenant Discrimination Insurance. Property managers should check to make sure their Errors & Omissions (malpractice, basically) insurance includes this. If not, it is relatively easy to get it added as a rider. For landlords, though, the solution is not so easy.
Although you probably have landlord’s insurance for your rental properties, that is usually just for physical losses, plus liabilities related to things that happen on the premises. Most of those policies do not have any riders that can add Tenant Discrimination Insurance.
I have found five ways to obtain this. I know of four companies who write separate policies for Tenant Discrimination. They are
- Tokio Marine HCC https://www.tmhcc.com/en-us/products/tenant-discrimination
- Markel https://www.markelinsurance.com/
- Capital Special Risks http://www.csrisks.com/products/tenant-discrimination/
- Hiscox www.hiscox.com
- Or, talk to your insurance agent about Professional Liability Insurance, even if you manage only your own properties. There are usually economical policies that include Tenant Discrimination.
If you contact one of the named insurance companies above, they can either take your application online, or refer you to a local agent. You don’t have to move all of your insurance. You can buy just the tenant discrimination from them, and keep all other insurance with your favorite agent or company.
Fair Housing issues can be tricky. For classes and video on this topic, click HERE.