In today’s insurance market, landlords are facing new and important changes that could significantly affect their protection and financial security. One of the biggest shifts we are now seeing is that many insurance companies are excluding Habitability and Wrongful Eviction coverages from Landlord Insurance policies.
If you own rental properties, it’s crucial to understand what these changes mean — and why they’re happening.
What Are Habitability and Wrongful Eviction Coverages?
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Habitability Coverage protects landlords against claims that a rental unit was not maintained in a livable, safe, and healthy condition. Tenants may sue claiming issues like mold, water damage, pest infestations, or other unsafe living conditions.
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Wrongful Eviction Coverage protects landlords if a tenant sues for being improperly or illegally evicted, claiming they were forced out without proper notice or through unfair practices.
In the past, many Landlord and Commercial Property policies automatically included these protections or offered them as optional endorsements.
Why Are Insurance Companies Excluding These Coverages Now?
Insurance companies have seen a sharp rise in lawsuits related to habitability and wrongful eviction claims, especially in tenant-friendly states like California.
These claims have become:
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More frequent — Tenants are increasingly aware of their rights.
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More expensive — Settlements and legal defense costs are skyrocketing.
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More difficult to control — Even well-meaning landlords are getting sued over small issues that spiral into big lawsuits.
As a result, insurers are paying out more in claims than they are collecting in premiums for these coverages, making it unprofitable to continue offering them at reasonable rates.
Rather than dramatically raising premiums across the board (which would make insurance unaffordable for many), insurance companies are choosing to exclude Habitability and Wrongful Eviction coverage altogether to control losses.
How Have Habitability and Wrongful Eviction Claims Affected Insurance Rates?
Over the last few years, claims for habitability issues (like mold, lead paint, or structural problems) and wrongful eviction disputes have caused:
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Higher overall rates for landlord insurance policies.
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Stricter underwriting rules, making it harder for landlords to even qualify for coverage.
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Increased use of exclusions to limit insurance companies’ exposure to high-risk claims.
Essentially, a few high-dollar lawsuits have impacted the entire market — and all property owners are now feeling the effects through higher premiums, less coverage, and fewer insurance options.
What Should Landlords Do Now?
Here’s what proactive landlords should consider:
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Review your current policy carefully. Make sure you understand what is and isn’t covered.
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Ask your insurance agent if Habitability and Wrongful Eviction are still included. If they are excluded, ask if any limited coverage can be purchased separately.
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Maintain your properties diligently to avoid habitability claims — keep up with repairs, address tenant complaints quickly, and document everything.
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Follow proper legal procedures for any eviction. Always provide appropriate notices and work with an attorney or eviction service if needed.
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Consider umbrella or legal liability insurance for extra protection against lawsuits that could otherwise be financially devastating.
Final Thoughts
The insurance market is changing, and landlords need to stay informed and prepared.
While these new exclusions are frustrating, they reflect a necessary adjustment by insurers trying to stay viable in a very challenging legal and claims environment.
By understanding the changes and taking steps to protect yourself, you can still operate successfully and reduce your risk of costly lawsuits.
Stay insured, stay compliant, and stay proactive. For a quote on your rental property call us at 877-898-9333 or click on link for a quote on Real Estate Investors with multiple properties, Apartment Buildings or Single Family Homes . We can help on home of nearly any age or area
