Property Management Insurance
Property Management Insurance
Protect your organization from risks and liabilities.
Protect your organization from risks and liabilities.
As a property manager, it is your job to take care of commercial buildings and residential properties. Unfortunately, that responsibility doesn’t always go smoothly. When something goes wrong, you will be held responsible. Your insurance can help to protect you against any liabilities.
Running your property management business involves activities such as negotiating and enforcing leases, collecting rent, maintaining the property and ensuring the safety of tenants. Each of these tasks involves its own set of risks and liabilities. Errors happen and sometimes things go awry even when you perform your duties perfectly.
Insurance for Property Managers
Property management coverage is errors and omissions (E&O) insurance, an important form of coverage for your business. It helps to protect you if there are any claims of negligence of deficient services during the operation of your company.
Unfortunately, these types of claims are on the rise. Even when your business made no errors or omissions, sufficiently defending yourself can be a drain on your resources. Furthermore, this type of claim would not be covered by general liability insurance because that type of policy does not cover errors.
Don’t risk your business and livelihood over a real or perceived error. Get the right insurance coverage for your property management company and grow your business confidently.
What Does Property Management Insurance Cover?
E&O insurance covers you for lawsuits related to mistakes you or a team member may make during your normal business practices. Such claims may come from business owners, tenants and even prospective tenants. These are some examples of the types of claims that property management insurance could protect you against:
- Wrongful eviction
- Tenant discrimination
- Failure to properly protect the property
- Other claims of a failure to perform contractual obligations
Determining whether such errors have occurred can be challenging and requires significant legal proceedings. Even if you successfully defend yourself against the claims, the cost can be substantial. Having the right coverage will help to protect you and your business against such lawsuits.
This type of policy will not cover certain types of claims, particularly those related to willful negligence or criminal behavior. In other words, errors and omissions insurance only applies to unintentional mistakes, not malicious acts. Depending on the policy, it may also not cover bodily injury, property damage or punitive damages.
Why Property Management Insurance Is Important
Simply put, lawsuits happen in the property management business. In many cases, the alleged error or negligence may be in the eye of the beholder. Someone may perceive an error such as wrongful eviction even when you have done everything by the book. Defending your business can be costly even when you are in the right.
Find the Right Property Management Insurance for Your Needs
At HUB International, we can help you find the right property management insurance policy for your business’ needs. As an experienced property management insurance broker, we work hard to ensure that each of our clients gets the right coverage for them. Contact a HUB property management insurance broker today to learn more about your options.
Property Management FAQs
General Liability: Covers third-party injury, property damage, and legal defense costs.
Professional Liability/Errors & Omissions (E&O): Protects against claims of negligence or errors in your services.
Property Insurance: Covers damage to your business property, like office space and equipment.
Workers' Compensation: Required if you have employees. This type of insurance covers injuries on the job.
Cyber Liability: Protects against data breaches and cyberattacks.
Commercial Auto: Covers vehicles owned by the company, including liability and physical damage.
Property management insurance is ideal for any individual or company responsible for managing residential, commercial, or industrial properties. This includes:
- Property Management Companies: Firms that oversee multiple properties for landlords or property owners.
- Independent Property Managers: Individuals who manage properties on behalf of owners.
- Real Estate Investment Groups: Entities that own and manage multiple investment properties.
- Landlords with Multiple Properties: Owners who handle their own property management duties.
Property management insurance is essential for any property manager who:
- Manages Multiple Properties: Whether residential, commercial, or industrial, managing several properties increases exposure to various risks.
- Handles Tenant Relations: If you’re responsible for lease agreements, rent collection, or tenant disputes, this insurance helps protect against potential legal claims.
- Oversees Property Maintenance: Managing repairs and maintenance can lead to liability issues if something goes wrong.
- Acts as a Liaison for Property Owners: If you represent property owners and make decisions on their behalf, you need protection against claims of negligence or errors.
Essentially, any property manager responsible for the day-to-day operations and management of properties should strongly consider property management insurance to safeguard against unexpected risks.
- Residential Property Managers: Overseeing apartments, condos or rental homes.
- Commercial Property Managers: Managing office buildings, retail spaces or industrial properties.
- Real Estate Asset Managers: Handling investment properties and maximizing their value.
- Vacation Rental Managers: Managing short-term rental properties like Airbnb or vacation homes.
- On-Site Property Managers: Living on or near the property they manage and handling daily operations.
- Community Association Managers: Overseeing homeowner associations (HOAs) and community properties.
- Facilities Managers: Responsible for the maintenance and operations of a building or facility.
- Leasing Agents: Handling the rental of properties and managing tenant relations.
These professionals all face unique risks that property management insurance can help mitigate.
Property managers need liability insurance to protect themselves from the various risks and legal claims that can arise during their work. Here’s why:
- Third-Party Injuries: If a tenant or visitor is injured on a property you manage, you could be held responsible. Liability insurance covers medical costs and legal fees if you're sued.
- Property Damage: If your actions or negligence result in damage to someone else’s property, liability insurance can cover the repair costs and any related legal expenses.
- Legal Defense: Even if a claim is unfounded, legal defense costs can be significant. Liability insurance provides coverage for attorney fees, court costs and settlements.
- Professional Errors: Mistakes in lease agreements, tenant screening or property maintenance can lead to lawsuits. Professional liability insurance (E&O) protects against claims of negligence or errors in your services.
- Tenant Disputes: Disagreements over leases, evictions or property conditions can escalate to legal action. Liability insurance helps protect against these disputes.
In essence, liability insurance is crucial for property managers to safeguard their financial stability and reputation while managing properties.
Property management involves significant risks, including:
- Financial: Non-payment of rent, property damage, legal issues and insurance claims.
- Operational: Vacancy, tenant turnover, maintenance issues and staff turnover.
- Legal: Fair housing violations, negligence, contract disputes.
- Reputation: Negative tenant reviews and public relations issues.
Property management insurance covers:
- Property damage: Natural disasters, fire, vandalism, theft.
- Liability: Tenant injuries, third-party injuries, property damage.
- Business interruption: Lost income, increased expenses.
- EPLI: Wrongful termination, harassment, negligent hiring.
- Professional liability: Negligence, breach of contract, fiduciary duty violations.
Property management liability risks include:
- Tenant injury: Slip and fall, elevator accidents, assaults, pet attacks.
- Third-party injuries: Visitor, contractor, vendor injuries.
- Property damage: Negligent maintenance, environmental hazards, attractive nuisances.
- Contract disputes: Breach of contract, discrimination, negligent hiring.
- Fiduciary duty violations: Mismanagement of funds, conflict of interest.
While Errors and Omissions (E&O) insurance provides coverage for many risks faced by property managers, there are certain types of claims that are typically excluded. Here are some common exclusions:
- Bodily injury and property damage: E&O insurance primarily covers professional liability, not physical harm or property damage.
- Criminal acts: Intentional acts of fraud, theft, or embezzlement are generally not covered.
- Negligence: While E&O covers negligent acts, it may not cover gross negligence or willful misconduct.
- Contractual liability: Claims arising from a breach of contract are often excluded, unless the contract is a professional services agreement.
- Known risks: Claims for losses that were known or suspected at the time of policy inception may not be covered.
- Regulatory violations: Violations of laws or regulations can lead to claims that may be excluded.
- Fines and penalties: E&O insurance typically does not cover fines or penalties imposed by government agencies.