Landlord Not Covered By Insurance Policy
I spoke with a prospective client who owned rental apartments and who was threatened by one of his tenants with a lawsuit. The tenant alleged he suffered damages because the landlord failed to make repairs to the rental unit which caused the unit to be inhabitable. The tenant said he was suing for emotional distress suffered by his family and would seek punitive damages to teach the landlord a lesson. The client had liability insurance of $3 million. I asked why he needed asset protection if he was insured. The client said his insurance policy did not cover damage from emotional distress or punitive damage awards. The incident illustrates the limits of many insurance policies. Most liability insurance covers damages from negligence, but it may not cover extraordinary damages on theories such emotional distress or punitive damages for intentional wrongs. Your adversaries have no obligation to limit their lawsuits to legal theories covered by your insurance policies, and your insurance company will do whatever it can to exclude your lawsuit from coverage.
