Wrongful or unlawful eviction is an insurable event under most general liability policies. Review your general liability policy, paying particular attention to the exclusions listed in the personal and advertising sections. If not specifically excluded from your policy, then coverage is afforded to the policy’s named insureds and additional insureds. Pretty simple right?
Unfortunately, it is not quite so straightforward. Wrongful eviction cases come in many shapes and sizes. As a landlord, you have many “just causes” to evict a tenant. In the event your tenant pursues an unlawful eviction case against you, there are infinite causes and complaints they can charge you with; ranging from habitability complaints to emotional distress. The complaint list is often quite long and in some cases not even justifiable or insurable.
From an insurance company’s perspective, the basis for coverage in a wrongful eviction case is not the tenant’s actions, but rather how the landlord evicted. The carrier must first review the insured’s behavior to ensure they are defending a “legal” eviction. Once they have established the eviction as legal, the carrier will defend the insured and its additional insureds. These cases move slowly and resolution can take well over a year.
If your case matures and you find yourself heading to court, you must be aware of what your policy will not cover in the event you lose. In California, punitive or treble damages are not insurable and are commonly excluded in all policies.
There is no “one-size fits all” policy for wrongful eviction. Insureds are often disappointed to discover this coverage is not outlined in their policy. However, as a rule, insuring contracts do a better job listing exclusions than coverages. If not excluded, you can expect coverage- as long as the event is insurable. In many cases this implied coverage actually benefits the insured as it is less restrictive on the types or causes of complaints to which the policy can respond.