Liability lawsuit testimony

[Francois D.]

'You need to set up entities to protect you from lawsuit liability' is the general advice.

In my area, liability insurance cost $22 per year for 300k

Somebody needs to explain me, what can happen, which is due to my negligence and cost more than 300k?

Besides the 1 in a million times event which they talk on TV, I would be curious to know how many of you landlords have been in a lawsuit and how much it cost you.

There are thousands of landlords on BP so that should give us a ‘statistically relevant sample’

Thanks for sharing your experiences.

[Jordan Thibodeau]

HI Francois! It really depends. I believe in maximizing your liability coverage (I have a million dollar policy), know your states tenant laws and follow them, and finally don't be a slum lord. The LLC is nice to have, but it won't save you from negligence. A good attorney will find a way to pierce the LLC's corporate viel.

[Account Closed]

@Francois D.,

Let's say you only have $300K, and you get sued and the lawyer decides to go to court and let a juror decide, and they give the person that got hurt $2 million now they collect $300k from the insurance company, and they get a judgment against everything you own regards whether it is hiding behind a corp or LLC. Get an E & O insurance policy it is very cheap.

Joe Gore

[Leon D.]

Almost any injury/liability issue serious enough to be sued over, in which a jury finds you liable, could easily cost over $300k. Attorney bills, expert witness fees, damages...

If you really think that $300k is so large an amount as to be almost impossible, you're not thinking hard enough.

[Geoffrey Dobran]

Depending on your venue, 300k is not that much. An example? An elderly visitor falls on a slight elevation on a sidewalk or walkway and breaks her hip. She needs a surgery, hospitalization, stay in rehab care facility and some assistance with daily living for the rest of her life. $300k won't even get you started.

You may not find any BP members with that experience, but that does not mean it doesn't happen.

[Eric Belgau]

Here's an example, in which the key elements are factual.

A guy buys a fixer and does a comprehensive remodel, replacing almost the entire structure, then he sells it to a couple. One of them gets fired and has trouble finding work, and the legal bills start stacking up. They decide to sue for construction defects, and they list out a whole series of issues with the house. It's all bull.

The insurance company can either pay or fight. They decide to fight. Over three hundred thousand dollars in legal fees later, the lawsuit is dismissed.

If the guy who did the remodel hadn't had coverage in place, he would have been forced to make the same fight or pay choice. If he'd fought, he probably would have cut his losses on legal fees earlier and ended up with a settlement. If he the fight had exhausted his limits (it would have if he had your limits), it also might have forced a settlement.

Some of the issues were specific to transferred real property, so they wouldn't apply to a landlord. For an issue like indoor air quality, though, tenants could make the same claim and send their landlords down a similar rabbit hole.

You're right @Francois D. that the vast majority of liability claims are going to be $300,000 or less. The coverage is priced accordingly. Each layer of protection costs less per dollar of coverage than the one beneath it, precisely because the risk pool will produce more small claims than large ones. But as the above example illustrates, you can blast through lower limits without ever doing anything wrong.

[Shawn Thom]

If these are in your personal name, don't forget other areas of liability.....Your car. I think you have bigger exposure there. The benefit of getting an umbrella liability policy is that it will cover both home and auto.

From my short experience in the insurance industry (5 years), we had a guy that hit some one while drunk (2nd (alleged) DWI accident), another fell asleep at the wheel and hit some one head on, some one hit a full school bus that sent everyone to the hospital, some one flip a car and a passenger fell out of the sun roof and the car landed on them. It was a child that died. That last one was their own child so no one to sue but if it was a friend or other relative they could have. Any of those could easily get very high payout along with lawyer bills.

On the home owners side (different than a landlord situation), we had a guy working on his roof and flick a cigarette. That started his house on fire which spread to 3 other houses. Burned 2 of them to the ground. We had 2 dog bites, one of which was the 2nd time a dog bit some one. The 2nd one bit a kid in the face which needed extensive plastic surgery. That was the one that was the 2nd dog bite from the same dog. The first one wasn't disclosed when policy was sold/underwritten. It came out during trial that they hid it. I'm sure that cranks up the amount of payout since it was 2nd time.

On the fire one, they couldn't never pin it 100% on the cigarette so I don't know that any liability was paid on it. It was on the tail end of the claim when I started there.

I never saw the final outcome of any of these (including the auto) so I don't know what final pay out was.

Short answer for me was to get an umbrella and not worry about it. I rest easier. I like resting easy.

[Michael T.]

While the actual liability may be one issue, the other thing that I didn't see addressed was the potential of costs associated with paying the plaintiff's attorney fees if they have any type of claim that there is a fee shifting provision under an applicable statute. Insurance is great but always has its limitations and insurance companies are in the business of selling insurance, not paying claims. So, often times it becomes a matter of delay, deny and defend from their standpoint.