Premises Liability Insurance

Accidents and injuries can happen on any property, whether it’s a retail store, office building or residential complex. For property owners and businesses, these incidents can lead to more than just harm — they may also result in costly medical bills, legal issues and reputational damage. This is where premises liability insurance steps in. It ensures that injured parties receive compensation for their medical expenses and other damages.

Premises liability insurance protects property owners and managers from claims caused by injuries, accidents or damages that occur on their premises. It generally focuses on situations where someone other than the business owner sustains harm due to unsafe conditions on the property. Examples include wet floors, icy walkways, broken stairs or any hazardous situation that a visitor, guest or customer encounters.

This type of policy is especially relevant for businesses that regularly welcome the public, such as retail stores, restaurants, offices or venues. When a visitor sustains injuries, the property owner may be legally liable for their medical bills, rehabilitation and other damages, depending on the circumstances.

There are several elements that help establish when a property owner may be held responsible for injuries that occur on their premises. In these instances, premises liability insurance may be necessary to protect against potential legal claims.

Property owners have a legal responsibility, or "duty of care," to ensure their premises are safe for visitors. This means regularly inspecting for potential hazards, such as wet floors, poor lighting or loose flooring, and addressing them promptly. If an owner fails to fulfill their duty of care in a "breach of duty," and someone is injured as a result, they may be held liable.

To hold a property owner liable, the injured party must prove that the owner's breach of duty directly caused their injuries. This means showing a clear link between the hazardous condition and the harm they suffered. For example, if someone trips due to uneven pavement, they must demonstrate that the owner's negligence directly led to their injuries.

Damages refer to the compensation sought by the injured party, covering medical bills, lost wages and pain and suffering. Premises liability insurance covers these damages up to the policy limits. The total amount depends on the specifics of the claim and the policy’s terms, but damages can add up quickly, making coverage essential for businesses.

The property owner owes different types of visitors varying levels of care. Invitees, for example, maybe customers entering a business and are owed the highest duty of care. Licensees, such as social guests, are owed slightly less. Trespassers, on the other hand, are generally owed minimal protection unless they are children or certain other exceptions apply.

Premises liability insurance coverage typically extends to a range of incidents that occur on a property. Coverage may include injuries resulting from accidents, falls or other hazards encountered on the premises. Here are some common coverage areas:

• Slip-and-fall accidents: Many premises liability policies cover slip-and-fall incidents. If a customer or visitor slips on a wet or icy surface and suffers injuries, the policy can cover medical expenses, rehabilitation costs and potential legal fees.
• Structural hazards: Coverage extends to injuries caused by structural defects or maintenance issues, such as collapsing ceilings, broken stairs or uneven flooring. If these conditions result in harm to a visitor, the insurance can cover the resulting damages.
• Negligent security claims: The business owner may face a negligent security claim if a visitor is harmed on the premises due to inadequate security measures. Examples include poor lighting, lack of security personnel or broken locks. Premises liability insurance can cover claims stemming from such incidents, including medical expenses and legal fees.
• Falling objects: Injuries caused by objects falling from shelves or displays may also fall under premises liability insurance coverage. In retail settings, improperly stocked or unstable shelving can lead to serious injuries, resulting in claims against the property owner.
• Animal-related incidents: In cases where an animal under a property owner’s care harms a visitor, premises liability coverage may come into play. This could involve attacks or injuries caused by poorly secured pets or animals on the premises, depending on state regulations and the terms of the policy.

Premises liability insurance doesn't cover all risks your business may face. Here's a list of what typically falls outside the policy's protection.

• Intentional acts of harm: Coverage does not extend to injuries resulting from deliberate acts of harm by the property owner. Intentional actions are not considered accidental and thus are excluded from typical premises liability policies.
• Employee injuries: Injuries sustained by employees on the premises fall under workers' compensation insurance, not premises liability coverage.
• Automobile-related incidents: Accidents or injuries caused by vehicles on the premises are not typically covered. Automobile liability insurance handles these claims instead.
• Damage to the property itself: This coverage does not extend to property damage. Separate property insurance policies protect against structural damage, vandalism and similar events.
• Business-related errors or omissions: Claims stemming from professional services, errors or omissions are not covered. Businesses offering advisory services should consider separate professional liability insurance.

Consider getting premises liability coverage when you open your business premises to the public or other third parties. Here are common scenarios where coverage is crucial:

Property owners must ensure the safety of their premises for all types of visitors, but not all visitors are treated the same under the law. Knowing which category of visitor a person belongs to can help determine if an owner was negligent.

• Invitees: Invitees are individuals invited onto a property for business purposes, such as customers in a store. Owners owe them the highest duty of care, meaning regular inspections and repairs are necessary. If a hazard causes injury, premises liability insurance can help cover the claim.
• Licensees: Licensees enter a property with the owner's permission for social reasons, such as friends or family members. They are owed a duty of care but at a slightly lower standard than invitees.
• Trespassers: Generally, property owners owe limited duties of care to trespassers, except in specific cases. If the trespasser is a child, the owner may need to address attractive nuisances, such as unfenced pools, to prevent harm.
• Contractors and vendors: Business owners may have liability responsibilities for vendors or contractors who enter the property for work purposes. Proper premises liability coverage addresses claims stemming from injuries while performing their duties.
• Public entrants: In some cases, businesses may owe a duty of care to the general public if they enter a space for specific purposes.
• Tenants and residents: Property owners who lease residential or commercial spaces have a duty to ensure the common areas are safe. Injuries sustained by tenants and their guests in shared spaces can lead to premises liability claims.

General liability insurance covers a broad range of risks businesses face, such as injuries to third parties, property damage and reputational harm. Premises liability insurance, on the other hand, focuses specifically on accidents and injuries that occur on the insured property.

Premises liability policies are often a component of a broader general liability policy, meaning business owners can have both types of coverage. However, certain situations may warrant separate policies. For instance, businesses that pose a high risk for premises-related accidents may require more comprehensive premises liability insurance to mitigate potential claims.

Different factors can impact your premises liability coverage costs. Consider the following for your business: 

• Business type and industry: Certain industries, such as hospitality or construction, present higher risks due to frequent visitor interactions and potentially hazardous conditions. Premiums are generally higher for these industries.
• Property condition: The state and condition of a property can impact insurance rates. Well-maintained properties typically see lower premiums, while properties with known hazards face higher costs.
• Claims history: Businesses with a history of multiple or high-cost claims may face higher insurance premiums.
• Policy limits: Higher policy limits provide more protection but often come at a higher cost.
• Security measures: Implementing robust security measures, such as surveillance cameras, lighting and security staff, can reduce risks and lower premiums. Insurance providers reward proactive safety efforts with reduced rates.
• Location: A business's geographic location influences its exposure to risks. Businesses in high-traffic areas may experience more frequent claims, resulting in higher premiums. Location-based risks, such as crime rates, also affect costs.

To file a premises liability claim, you must notify your insurance provider about the incident as soon as it occurs. You need to provide detailed documentation, including photos, incident reports and witness statements, to support your claim. Once the initial report is submitted, expect to communicate with an insurance adjuster. The adjuster will evaluate the claim, assess damages and determine coverage eligibility.

After completing the investigation, your insurance provider will make a settlement decision based on the policy terms. If the claim is approved, they will issue payment for covered damages up to the policy limit. In case of disputes, consider consulting legal counsel or engaging in further negotiations to reach a fair resolution.