The relationship between a property owner and property manager can be complex, and clearly identifying each party’s responsibilities is fundamental to achieving success. Insurance is a topic that should be discussed and outlined prior to entering into any agreements. We’ve previously covered the insurance the renters should carry and outlined key coverages to purchase to protect you as the homeowner. Today, we’d like to identify why your property manager should be listed as an Additional Insured on your home insurance policy.
Property managers carry Errors and Omissions, General Liability, and, in some cases, Workers Compensation and other ancillary insurance coverages. And while each of those coverages have a purpose, none of them offer protection to the property manager for claims arising from the home itself. Adding your property manager as additional insured compliments their insurance policies and protects them against claims expenses not of their doing.
As an example, imagine that your home has a water leak that renders it uninhabitable and ruins $30,000 of the tenant’s personal property. Further complicating the situation, the tenant did not have renter’s insurance, and subsequently chooses to sue both you and the property manager for their losses. While your home insurance would defend you in the liability suit, it is unlikely your property manager would be extended coverage under any of their commercial policies. By adding the property manager as Additional Insured, they are able to share in the legal defense provided under your policy.
You do not want to be held liable for negligent acts or errors committed in the management of the property, and therefore require your property manager to carry proper insurance. Just the same, the property manager does not want to be forced to cover attorney and other defense fees out of pocket for suits arising directly from the home. A successful partnership with open communication regarding each party’s insurance situation will lead to better, and more complete, protection for all involved parties.
Agency Note: Adding property managers as additional insureds is standard practice within the commercial real estate industry. However, within residential rental insurance, many carriers have been slow to adopt this practice. If your insurer will not add your property manager or is charging you to do so, please contact our agency. As experts in the field, we have industry leading options available for you.
DISCLAIMER: This article is provided for general informational purposes only and should not be relied upon for legal advice. Old Harbor Insurance Services, LLC recommends you consult your risk manager, attorney, business advisor, or insurance representative for all questions or concerns.