It appears these days, that property managers of both residential and commercial buildings are becoming more and more susceptible to lawsuits and a number of other types of claims. And as a manager, your job is to care for the business’ property. Unfortunately, when things go wrong, you can – and will – be held responsible. That’s why having the right insurance is more important now than ever.
Fortunately, our independent insurance agents are here to eliminate the hassle of searching on your own by walking you through a hand-picked selection of top insurance policies to cover both your business and your employees. But first, let’s talk more about the protection you need and why you need it.
What Kind of Property Management Liability Risks Are There?
Property managers are ultimately responsible for finding and keeping tenants on someone else's property. To be successful, they must do the following:
- Negotiate, sign, and enforce leases
- Collect rents
- Make repairs
- Conduct routine maintenance
- Ensure the safety of tenants and guests
And each one of these endeavors comes with its own set of risks. And that’s why there’s property and liability insurance designed to protect your investments.
What Does Property and Liability Insurance Cover?
The biggest risks to be concerned about in your line of work are related to property maintenance and contract negligence. There are often questions about who – the manager or the property owner – has the insurable interest on a building. But in most cases, property managers need to carry commercial property insurance and a few other forms of business liability insurance.
- Commercial property insurance: Protects a property manager’s assets after a physical loss due to smoke, fire, wind, hailstorm, vandalism, and other covered events. Property managers are generally responsible for keeping insurance coverage on the buildings they manage, but this depends on their responsibilities as outlined in the contract with the property owner.
- Business income insurance, or business interruption insurance: This is typically included in a commercial property policy. It protects your earnings if you cannot collect rental income for a period of time as a result of some type of unexpected event (storm, fire, etc.). It allows you to earn income while repairs are made to the property.
- Commercial general liability: This type of policy provides coverage if you, your products, services, or employees are found to have negligently caused an injury or damage to someone else’s property. If a resident or visitor falls and is injured on a property you manage, general liability insurance provides coverage for claims against you. It covers damages for the injured party and any costs associated with your legal defense.
- Professional liability/errors and omissions (E&O) insurance: This offers coverage for lawsuits that come after providing negligent or deficient professional services.
Property managers may want to consider a business owners policy, or BOP, which is a bundled small business insurance policy that includes property coverage, liability coverage, and business income insurance. The size of your business and a number of other factors will help you determine whether you qualify for, or should purchase, a business owners policy.
Why Do Property Managers Need Liability Coverage?
One of the most important types of insurance a property manager should have in their insurance portfolio, is professional liability insurance, or errors and omissions coverage. When it comes to property management, there are a number of unique exposures that can be protected by professional liability insurance, like:
- Failure to purchase appropriate property insurance, resulting in a loss for the property owner
- Wrongful or negligent evictions
- Discrimination claims (e.g., tenant claims some type of discrimination)
- Other claims of failure to perform professional duties according to your contract
Professional liability insurance covers your legal defense costs, settlements, or judgments you are required to pay, court costs, and attorney fees. Commercial general liability insurance may not provide coverage for any expenses related to professional liability claims or lawsuits, which makes the addition of this coverage so important.
However, E&O policies have specific coverage exclusions, depending on your profession. Typical exclusions could include:
- Criminal, fraudulent, or malicious acts
- Bodily injury and property damage
- Workers compensation claims
- Punitive damages
Other Property Management Coverages to Consider
To properly protect yourself, you’ll need a combination of multiple coverages, all depending on your situation and risk exposures. When everything’s all combined together, your insurance portfolio will be able to serve its purpose. However, to get there, you may want to consider the following additional coverages:
- Non-owned auto liability coverage: This should be purchased if you or your employees drive personal vehicles for business use. It can be added to a business auto insurance policy or to your general liability policy.
- Workers compensation insurance: This is required for most businesses that have employees. It protects you and your employees from the costs of work-related injuries and illnesses.
- Group health, life, and disability insurance: These, and more, can be offered to your employees in order to make your company a more attractive place to work.
- Employee dishonesty coverage: A form of crime insurance, this protects the business owner from a financial loss due to employee theft. You may not think that your employees would ever steal from you, but if they collect rent in cash or other forms of payment, the temptation is there. A basic employee dishonesty policy can provide coverage for forgery, alteration, theft, unauthorized electronic funds transfers, credit card fraud, computer fraud, money order fraud, and counterfeit fraud. And you can even add extra endorsements for additional coverage.
- Equipment breakdown insurance, often referred to as boiler and machinery coverage, is a relatively inexpensive policy that supplements your property policy. It covers certain costs associated with accidental breakdown of machinery or equipment and the resulting property damage or loss.
Finding and Comparing Property Management Insurance Quotes
Our agents will review your needs and help you evaluate which property management insurance coverages makes the most sense. They'll also compare policies and quotes from multiple insurance companies to make sure you have the best protection out there. They'll hook you up — in a comprehensive and affordable way.
What's So Great About Independent Insurance Agents?
Independent insurance agents excel at matching the most appropriate policy to the business in need. Shopping around for insurance policies can be tricky, confusing, and time-consuming, and an independent insurance agent's role is to simplify the process.
They’re also there to help make sure you get the absolute best deal, and the one that meets your unique needs. They shop and compare insurance quotes for you, and they'll break down all the jargon so that you understand exactly what you're getting.