Real Estate Owned Liability Insurance

This policy is general liability coverage for your foreclosed property — serving as protection from bodily injury and property damage lawsuits against the bank. Claims examples include (1) a real estate agent falls through the floor of the house while he or she is showing it, (2) a child is injured playing in the back yard, (3) a visitor falls in the driveway.

I prefer that the bank’s general liability insurance (the same policy that covers bank branches and parking lots) covers foreclosed properties. You get broader coverage and the protection of the umbrella liability policy. Most insurance agents selling REO property insurance almost automatically add liability coverage. Get this exposure covered on your bank’s general liability policy and cancel the separate REO liability policy.