Landlord Tip: Why Liability Cover in Your Insurance Policy Matters

When you hear the word "insurance," most people think about storms, property damage, and lost rental income. But there's another part of landlord insurance that’s just as important — and sometimes even more critical:

Public liability cover

This part of your landlord policy protects you if someone is injured or their property is damaged, because of something related to your rental property — and they decide to seek compensation.

As a landlord, you have a legal responsibility (called a “duty of care”) to keep your property reasonably safe for tenants, visitors, and tradespeople. If something goes wrong and you're found responsible, liability insurance is what steps in to protect you financially.

What Does Liability Cover Typically Include?

• Legal defence costs (e.g. lawyers or court proceedings)

• Compensation payments (e.g. medical costs or loss of income suffered by the injured person)

• Settlement costs

• Property damage claims made by others

Standard landlord insurance includes liability cover (limits vary, often $10–$20 million), but be sure to check your PDS or ask your broker what limit applies.

Real-Life Examples of When Liability Cover Can Help

➤ Example 1: Injury to visitors

A tenant’s friend is visiting and falls down uneven stairs that weren’t properly repaired. They break their leg and can’t work for two months — and seek compensation for medical bills and lost income.

How liability cover helps: It pays for the injured person’s medical costs and your legal defence if they sue you.

➤ Example 2: Injury to tenants

Your tenant trips on poorly maintained pavers in the backyard and suffers a back injury. They take action against you, claiming the injury was due to a hazard you should have fixed.

Liability insurance may cover:

• The tenant’s medical costs

• Legal expenses to defend you

• Compensation settlement if you're found liable

  
  

➤ Example 3: Property damage to neighbours

A large tree on your rental property falls during a storm and damages the neighbour’s roof and fence. They allege you failed to maintain the tree properly.

Liability cover can:

• Cover the cost of the neighbour’s repairs

• Handle legal claims or disputes

• Potentially prevent an out-of-pocket legal battle

  
  

➤ Example 4: Injury to contractors on-site

A plumber you hired slips on mossy concrete while performing maintenance and suffers a back injury. They sue you for failing to provide a safe environment.

Liability coverage could:

• Pay for legal costs

• Cover the worker’s injury claim

  
  

Why This Matters

Without liability insurance, you’d face all of these costs on your own — including court fees, lawyers, and potential settlements that could run into tens or hundreds of thousands of dollars. For landlords, even if damage to the physical home is minimal, a liability claim can create serious long-term financial risk.

Tips to Stay Covered

• Keep the property safe and well-maintained — landlords document all repairs

• Use licensed tradespeople

• Keep records of inspections and tenant communication

• Always notify your insurer or broker if something changes (e.g., short-term letting or renovations)

If you’re unsure what level of cover you have, or whether your property setup meets the requirements, speak to your insurance broker — they can help you understand your policy in plain English and ensure you're properly protected.