Unfortunately, the answer is: pretty much nothing.
Most landlords are completely unaware that they can be sued for a variety of “discrimination claims,” many of which will be without any basis in reality. The sad truth is that some people will unscrupulously try to sue anyone they can for any amount of money possible, and your commercial general liability and commercial package policies will not protect you against these “discrimination claims.”
That’s the bad news. The good news is that you can be insured against these claims – that coverage just isn’t automatically included. Considering that we know of almost no landlords who have managed to avoid these types of claims entirely, no matter how above-board their policies, we highly recommend you look into Tenant Discrimination Insurance.
Why Aren’t These Claims Covered By General Liability Policies?
That’s a good question. A commercial general liability policy covers you from any bodily injury or property damage done to others on your property. ‘Discrimination’ slips through the cracks in this language – it doesn’t qualify as a ‘bodily injury’, but the claim will say that the tenant feels injured nonetheless and deserves to be compensated for mental distress, monetary loss, or other ‘injuries’ of a non-physical type.
Many landlords don’t know that this coverage exists or that it’s extremely necessary, and quite a few are very upset to discover that their general liability doesn’t cover them in this situation. Don’t get caught after the fact – make sure you’re covered against these types of lawsuits before they occur.
What Does Tenant Discrimination Insurance Cover?
Any claim brought against you that accuses you of discriminating against a tenant based on their race, color, religion, age, gender, national origin, disability, pregnancy status, or sexual orientation is covered by Tenant Discrimination Insurance. Often the claims will include an accusation of harassing the tenant or wrongfully evicting them based on such discrimination.
Policies are fairly inexpensive, particularly considering that you will almost certainly require the use of this coverage in your tenure as a landlord. Policies start as low as $1,800 a year as a separate stand-alone policy that offers broad coverage for discrimination claims.
I Would Never Discriminate In This Way – Do I Really Need This Coverage?
Unfortunately, the answer is yes. Our experience (and the experience of many of our clients) is that acting in good faith is not always enough to prevent costly discrimination lawsuits. You may have evicted a tenant for perfectly sound reasons, but if the tenant claims that your eviction was because you are prejudiced against them in one of the above areas, they may still be able to bring a case against you.
The problem has only been exacerbated in recent years now that tenants can file discrimination complaints online with the US Department of Housing & Urban Development. While many complaints are legitimate, a growing number are simply “nuisance” claims who hope to make a quick buck or who hold a grudge against their landlord.
Even if you are scrupulous about record-keeping and your behavior toward your tenants, you will still need to spend money on legal representation to fight the claim in court – which you may be able to ill afford if the lawsuit drags out, even if you ultimately win and recoup your expenses.
Likely Situations Where This Coverage Applies
Obviously, if you do in fact discriminate against certain types of tenant on the basis of their race, color, religion, age, gender, national origin, disability, pregnancy status, or sexual orientation, then you can expect that you will be sued in accordance with discrimination laws. If you fall into this camp, you will obviously see the value of a Tenant Discrimination Policy.
Assuming, however, that you are not the sort of person who discriminates against your tenants in these ways, here are a few scenarios where you may still find yourself subject to a discrimination-based lawsuit.
- One of your tenants insists on playing very loud music at all hours of the night and day. After numerous complaints, you evict the tenant based on your rental agreement, which has a noise ordinance. He then sues you for racial discrimination, claiming that you unfairly targeted his rap music when (though you have received no complaints saying so) other tenants played other types of music loudly.
- One or several of your current tenants are prejudiced against homosexuals, and frequently harass their neighbors, who are a gay couple. They leave notes with homophobic slurs, mutter hurtful things under their breath, and general make the couple feel under attack. The couple sues you, the landlord, for allowing the tenants to do this – even though you have little control over how what your tenants say to one another if they are not making outright threats.
As you can see, there are many situations where discrimination can be claimed – where, indeed, the claimant feels very strongly that they were discriminated against – even though you did your best as a landlord to uphold the standards of your building and hold your tenants to the terms of their leases. We have claim examples just like these in our Tenant Discrimination files, and we have seen hundreds of others come through.
Without Tenant Discrimination Insurance, you will be liable for the costs of fighting such cases in court, and if you lose, you will also be liable for the cost of damages. You may decide it’s not worth taking to court and decide to settle, which will also incur costs – and may damage your reputation. As a landlord, it’s in your best interest to protect yourself from these inevitable lawsuits – and if you only have a general liability policy currently, you are not covered now.