New Liability Laws and Requirements are Costing Landlords Thousands of Dollars

Being a landlord has never been an easy or cheap business venture, but it’s about to get even more expensive for some people. In addition to rising property taxes and an increase in the cost of repairs and other services, many property investors are now required to shell out even more money for insurance premiums just for the right to own rental property.

Liability insurance is critical for landlords

It’s always been important for homeowners to carry liability insurance just in case someone is injured on their property. Injured parties often file personal injury lawsuits and win generous compensation. Landlords need to be insured to avoid having to pay out of pocket and possibly lose their business for not carrying insurance.

Property owners can be held liable for injuries sustained on their property by anyone, including invited guests, service personnel, and even trespassers. In fact, many trespassers have successfully sued homeowners after being injured while illegally present on their property. One of the more concerning aspects of this is the number of criminals who have successfully sued homeowners after being shot while in the process of burglarizing the home.

In today’s world, property owners, especially landlords, can’t risk being caught without insurance because the financial impact can be devastating. It’s riskier for landlords because they don’t have any control over the condition of their property while it’s being occupied by renters. If a tenant doesn’t maintain the property or warn visitors of known hazards, and someone gets hurt, it’s the landlord who will be held legally and financially responsible.

New laws are increasing the cost of being a landlord

There are several new laws that make it more expensive than ever to be a landlord. For landlords in New Jersey, both car owners and landlords will soon be paying more after the governor signed several new bills into law. When the law takes effect 90 days from being signed, landlords will be required to carry a higher amount of liability insurance for death or bodily injury. The standard requirement is $500,000, but small, owner-occupied, multi-family properties will only be required to carry $300,000 in coverage.

In Michigan, property owners have been given even more legal responsibility concerning obvious and avoidable hazards on their property. Prior to July 28, 2023, Michigan courts held that property owners were not generally responsible for protecting people from “open and obvious” hazards. Typically, obvious hazards needed no warning, and it was enough to warn a visitor about a hazard that may not be so obvious.

However, when an individual fell after stepping in a pothole in a parking lot, the Michigan Supreme Court abolished the “open and obvious” defense, and ruled that property owners are responsible for correcting and preventing visitors from even the most obvious hazards.

In a way, this makes sense. One of the cases that led to this new level of responsibility involved a grocery store patron who tripped over a cable in the middle of the store. While a cable seems like it would be obvious, not everyone will see a hazard like that in a place where they aren’t expecting to run into cables. In a grocery store, people are on a mission to find food items, and it may not even register that there is a hazard in front of them.

Moving forward, it will be up to juries to decide slip-and-fall cases in Michigan, which adds to the increase in financial liability for landlords. Juries routinely hand out large awards for injured plaintiffs, and landlords who find themselves in the middle of a legal battle can expect to pay high judgments. Even though their insurance policy will cover the judgments, they’ll probably end up with increased rates and their coverage might get dropped.

New Jersey vacant property owners are responsible for sidewalks

A recent New Jersey Supreme Court ruling makes all commercial landowners responsible for maintaining the public sidewalks connected to their properties, including vacant lots. If a property owner fails to keep the sidewalk(s) safe, and a passerby is injured, the owner can be held liable in court.

Being a good landlord isn’t cheap

Landlords who have owned property for many years are familiar with the continual rising costs of doing business. However, for many, the cost of owning rental property has increased exponentially in recent years. Although the increase in liability and required coverage is designed to protect innocent people when injured, they are still moves that increase the cost of being a landlord.