There are dozens of decisions you must make when you become a property manager. From determining the best price to rent your building to hiring contractors to handle electrical or plumbing issues, it can be a lot to keep straight.

That’s why it’s advisable to always make a clear plan for how you’re going to operate your business as a landlord. This can be a useful cheat sheet when decisions need to be made in the heat of the moment. Part of this plan should be whether or not you want to purchase landlord liability insurance. Here is some information about landlord liability insurance to help guide your decision.

What is Landlord Liability Insurance?

Liability insurance is a policy that helps protect you should a tenant try and press charges if they get injured on your property. If a structural problem in your unit causes a tenant to injure themselves, you may be found liable unless you have a good personal injury lawyer of your own.

If you are found negligent by failing to adequately warn tenants about an issue, you may be found liable for their injury and other costs such as lost wages and medical expenses. In these types of situations, your general homeowners insurance policy will likely not cover the costs associated with these damages. Landlord liability insurance is one way to protect yourself against this, as it can cover any legal fees or judgments associated with your case.

What are the Benefits of Landlord Liability Insurance?

Even if you use a leading property management tool such as Turbo Tenant to screen your tenants, you can never be sure that someone won’t file suit if they get injured in your rental. Obviously, being able to cover any legal costs associated with your court case can be an important protection to have if you want to avoid losing a lot of your business’ profits in a settlement.

Personal injury settlements can average anywhere from $3,000 to $75,000, which can be a major setback for newer landlord. If your unit is older and you’re likely to be doing a lot of maintenance and repairs while it is occupied, you may also want to purchase a landlord liability insurance policy. Especially if you have multiple rental units or have a large amount of tenants, it can be beneficial to have landlord liability insurance.

What are the Drawbacks of Landlord Liability Insurance?

The only major drawback of taking out a landlord liability insurance policy is cost. Some landlords, particularly ones at the beginning of their careers, may want to find ways to cut corners and save money. This might mean foregoing a monthly insurance cost and just hoping that they properly screened their tenants to avoid bad apples.

It’s worth noting, however, that many states allow for a tax deduction on insurance costs for landlords, so it’s worth checking with your local tax professional to see whether or not you can deduct insurance costs from your business. Doing so can eliminate any reason to avoid taking out a policy that can save you tens of thousands of dollars in the long run.

Ultimately, whether or not you purchase landlord liability insurance is up to you and how you want to run your business. Savvy landlords will likely opt for this type of coverage though, since it protects them and gives them peace of mind. Remember that you’re bound to encounter a disagreement with your tenant at least once or twice a year, and it’s always a good idea to be able to shelter your business from any avoidable expenses like a lawsuit.

Landlord liability insurance does just that, making it a worthwhile option for most, if not all, property managers.