Property owners are generally liable for injuries that people experience on their property. While this is relatively straightforward for homeowners, who must purchase liability coverage as part of a homeowner's insurance package, it is a more complex issue for renters and condo owners who are responsible not only for their individual units but also for the common areas they share with neighbors.
Rental tenants have the option of purchasing rental insurance to cover their personal property and provide liability protection within their rental units. Some rental leases require tenants to purchase coverage, but there is no legal obligation for a renter to do so otherwise. Renters insurance only covers the space within the individual's unit and does not apply to common areas. This means that if a tenant's guest, or the tenant herself, experiences an injury in an apartment hallway, foyer or stairway, the landlord is responsible.
Because they have responsibility for common areas within the rental properties they own, landlords need adequate insurance to protect their business interests. A landlord's insurance policy covers property belonging to the landlord or management agency, such as outdoor signs and lighting fixtures, but the most important coverage it provides is for common areas and the building itself. Damage to a common area due to fire or weather, or liability in the case of an injury, falls under the landlord's insurance policy coverage, subject to the policy limits.
For Condo Owners
Condominium owners don't have landlords to provide common area insurance, which means they must purchase it along with their fellow owners. Condo management agencies don't provide insurance of their own, which means that condo owners associations need to purchase insurance that is similar to a landlord's policy. Individual owners cover the cost of common area insurance through their condo association dues, but they also need to purchase individual policies for their own units.
One reason that common area insurance is so important, regardless of who buys it, is the fact that negligence lawsuits can be so costly. Someone who experiences a trip, fall or exposure to hazardous materials in a common area can file a lawsuit against the property owner seeking compensation for medical bills, money for court costs and punitive damages. The cost of a defense or settlement may be enough to bankrupt a landlord or condo owner's group, which makes the personal injury liability portion of common area insurance an essential part of owning property and doing business.