Buying real estate as an investment, both residential as well as commercial, can yield great rewards. Especially when the investor is able to snatch up a property at a below-market price. But owning real estate also means protecting yourself protect your real estateagainst legal claims as well should something cause an injury to someone on your property.

If someone is hurt in your office building due to maintenance issues or otherwise, it’s possible you’ll be faced with a lawsuit. You need to make sure you’re protected against both inside and outside liability.

Inside liability is a risk associated with harm to someone physically on your property. For example, you buy and rent out a home to a couple. It’s your responsibility to the tenants to provide a safe, livable environment for both your tenants and their guests. If the couple invites some friends over for dinner and one of the guests trips on an uneven walkway you might be liable for any injury. That’s inside liability.

Or say that one of your contractors works on your house and leaves an electric saw on a table. An interested buyer decides to enter the property to take a look inside and walks over to the table, picks up the saw and drops it on his foot, breaking a few toes.

Outside liability is when an injury occurs off the property during the course of business related activity. Say that one of your employees drives a real estate agent over to one of your listings and gets into a wreck, and the agent is injured. The employee was working on your behalf and was the cause of the accident. The agent could file a lawsuit and you would be liable.

It’s vitally important that you review your insurance coverage protecting you against both inside and outside liability with your real estate agent at least twice per year. Making sure you’re covered isn’t just paranoia, it’s good business practice.