Michigan Property Manager Insurance Policy Information
Michigan Property Manager Insurance. Whether you manage a commercial or residential property, you are becoming increasingly apt to be sued. Property managers are often at the center of claims for various occurrences, including people becoming injured on the property.
Property managers screen tenant applications, implement leases, collect rents and security deposits, pay bills, and handle the overall property management functions, including arrangements for security, for residential and commercial building owners. Some contract out the performance of maintenance services and lawn care, while others do the actual service operations. In some cases, the manager will live on premises.
Even though you are only there to care for the building or complex on behalf of whoever owns it, if something goes awry, you can - and oftentimes, will - be looked at as the responsible party. Get the Michigan property manager insurance coverage that will keep you and your business protected.
Michigan property manager insurance protects your business from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Liability Risks for MI Property Managers
Property managers are tasked with finding tenants and keeping them. They have the power to negotiate leases, sign legal documents, and enforce the provisions of leases on behalf of their employers. They can also collect rent, order repairs for the premises, conduct maintenance, ensure that guests and tenants are safe, and more. With each of the activities listed above, there is potential liability for the property manager. Michigan property manager insurance is what protects your business against lawsuits and claims.
How Property Management Coverage Can Help
The upkeep of the managed property and any liability arising from contract performance or negligence are often the sources of liability claims against property managers. Oftentimes the question becomes which party should be held liable: the property owner or the property manager. In general, the property manager is required to maintain commercial insurance on the properties being managed as well as liability insurance for the business - sometimes in several forms:
Commercial Property Insurance works to protect the assets of the property manager from losses caused by fire, smoke, hail, wind, and vandals. The property manager is usually responsible for maintaining this insurance on the buildings for which they are responsible, although this varies based on the individual contract the manager has with the owner of the property.
Business Interruption Insurance - sometimes called business income insurance, may be included with a commercial property insurance policy. This type of coverage provides protection for your income if you are unable to collect rental fees for a specific period of time due to a covered loss. For example, if the rental property is damaged due to fire or a storm. This insurance also allows you to bring in income while any repairs are undertaken that allow tenants to come back to the property.
Commercial General Liability gives you coverage if you, your employees or other company representatives cause injury to a person or property. For instance, if a tenant or a guest falls on the property and becomes injured, then the policy provides you coverage for claims that may arise. It will also cover any medical costs associated with the injury or accident and even pays for legal defense in some instances.
Errors And Omissions insurance (E&O), also known as professional liability insurance, protects you from lawsuits that occur when you are negligent in rendering professional services in your role as property manager. In addition, property managers may want to opt for a business owners' policy, also known as BOP, to bundle several coverage types together. Usually, a BOP policy provides property insurance coverage, liability insurance, and insurance to protect from business income loss. Several factors are used to determine if the business needs or qualifies for a BOP policy. These include the business' size, among other factors.
Importance of Property Management Liability Coverage
Another important type of coverage to think about as a property manager is professional liability coverage. This coverage can help if you:
- Fail to purchase the right amount of insurance, and as a result, the property owner experiences a loss
- Negligent or wrongful evictions of tenants
- Claims of discrimination by tenants or employees
- Other types of claims resulting from your failure to carry out your professional duties
Professional liability coverage pays for legal defense costs and judgements as well as attorney fees, court costs and more. Errors and omissions come with some exclusions, however, which may include exclusions for malicious, criminal, or fraudulent acts; bodily injury; property damage; punitive damage; worker's comp claims; other types of claims. In addition, you must think about non-owned auto insurance. This is coverage for personal and non-personal vehicles driven in the course of doing business. It can be added to the business' auto policy and general liability coverage.
Most businesses should purchase worker's comp policies for their workers. In most states, it's required by the government. If an employee becomes injured or ill due to work-related perils, this coverage pays monetary and ongoing income lost as well as medical costs.
Work with your insurance agent to find the right level of coverage for your needs as a property manager. Property manager's insurance is a very special type of coverage. Your insurance agent can review your particular situation to help you determine which levels of protection and types of coverage are essential for your ongoing success in your field and to protect you from financial loss if the unexpected happens.
Michigan Property Manager's Risks & Exposures
Premises liability exposures at the office include visits from building owners and prospective tenants. To prevent slips, trips, or falls, all areas accessible to visitors must be well maintained with floor covering in good condition. The number of exits must be sufficient, and be well marked, with backup lighting in case of power failure.
Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. Off-premises exposures depend on the contract between the property manager and the building owner. While building owners are usually responsible for maintaining sidewalks, parking lots, and other exterior areas, these responsibilities may be transferred to the property manager by contract. If employees of the property manager handle maintenance and cleaning of rental property, spills, marring, scratched surfaces, or the upset or dropping of breakables, may occur.
Many of these fall under the care, custody, and control exclusion, and should be covered under inland marine. Wet, slippery floors from mopping can pose a slip and fall hazard to the tenants or employees and passersby. The absence of basic controls to minimize exposure to the public such as caution signs and the use of non-slip finishes may indicate a morale hazard.
If there is lawn care, hazards include injury or damage from stones or other debris thrown by power mowers, trimmers, and other equipment. Tree trimming may result in falling branches or debris that causes bodily injury or damages power lines or other property. Property managers often employ casual labor for outside work, with minimal time or budget for training. Failure to secure the premises during cleaning and completion of the work can result in arson, burglary, and robbery by unauthorized persons.
The property manager should have specific procedures addressing lockup and key control that include a final checklist by the supervisor of a particular client. Personal injury exposures include wrongful eviction, invasion of privacy, assault to the tenants or their employees, and discrimination. There should be clear, objective guidelines regarding tenant acceptability. Failure of the property manager to run background checks and review references on employees increases the hazard and reduces available defenses.
Environmental impairment exposures are moderate if lawn care is provided. The property manager may be required to obtain a license in order to apply herbicides or pesticides. Hazards include injury to tenants from dangerous fumes, injuries to eyes from overspray, and damage to property or pets from overspray. Improper application can damage the lawn and leach into the soil or water supply.
Workers compensation exposure may be limited to that of an office if maintenance and repair work is contracted to others. Because office work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations.
The exposure is higher if the firm provides the maintenance and janitorial work. Casual labor, high turnover, and minimal training are all factors affecting losses. Workers can experience lung, eye, or skin irritations and reactions to the cleaning or lawn care chemicals. Slips, falls, and back injuries and hernias from lifting are common. If power-cutting equipment is used, cuts or amputations may occur. Employees can be assaulted while working at "off hours" in empty buildings. There should be close supervision to keep employees safe.
Property exposure usually consists of an office with equipment and supply storage. Ignition sources include electrical wiring, heating and air conditioning systems, wear, overheating of equipment, maintenance work, and cleaning chemicals and supplies. Should any of the chemicals and cleaners be flammable, proper labeling, separation, and storage is needed in approved containers and cabinets.
Inland marine exposures include accounts receivable if the firm offers credit, computers, contractors' equipment for maintenance and lawn care, and valuable papers and records for building owners' and lessors' information. Supplies and equipment kept on the customer's premises may be difficult for the property manager to safeguard and protect. If these are transported between jobs, potential causes of loss include theft, collision, and overturn.
Property managers often have a bailees exposure for customers' property in their care, custody, and control. For large-valued items like carpeting and draperies, a small spill or other damage could reduce the value of the entire item. Valuable papers and records include leases, which should be stored in fireproof cabinets. Duplicates of all data should be kept off premises for easy replication in the event of a loss.
Crime exposure is from employee dishonesty and money and securities. Hazards increase without proper background checks, along with monitoring procedures and securing of all records to prevent unauthorized access. All job duties, such as ordering, billing, and disbursing, should be performed by separate individuals and reconciled on a regular basis. Receipts should be issued for any cash payments received.
Bank deposits should be made on a timely basis to limit the buildup of cash on premises. Audits should be performed at least annually. Access to units must be limited to those authorized to do so, and access to master keys must be strictly controlled. Units should be rekeyed when there is a change in tenant.
Business auto exposures may be limited to hired and non-owned. Any employees who run errands for the property manager using their own vehicle must carry adequate underlying limits. If vehicles are provided to employees, there should be written procedures regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.
Michigan Economic Data And Business Insurance Requirements
Business owners who are interested in establishing operations Michigan must have a thorough understanding of the state's economy. They should also familiarize themselves with any regulations and limits that state may have in place for commercial insurance.
Any entrepreneur who is thinking about starting a business in the Great Lake State first needs to determine if it's a feasible location for business operations. As such, it's important to have a keen understanding of pertinent details regarding the economy of Michigan, in addition to the types of insurance coverage that are mandatory for corporations that operate within the state.
Economic Trends for Businesses In Michigan
After a long period of stagnant job growth in the early part of the 21st century, MI has been experiencing a steady increase in employment gains. Between 2009 and 2018, the state has enjoyed a period of uninterrupted job growth; the longest stretch of job growth since World War II. According to economists at the University of Michigan. While there has been a slight decline in the rate of job growth, job creation continues and forecasters say will continue for the next two years, into 2021.
In 2018, an estimated 55,200 jobs were created; in 2019, it's expected that 35,800 jobs will be created, and in 2020, economists believe that there will be a total of 39,300 jobs created in Michigan. While that rate of growth is 1.9 percent slower than the job growth rate between 2011 and 2016, it is still a steady increase overall. In total, approximate 683,200 jobs will be created in MI between 2099 and 2020; almost four out of the five jobs that were lost during the early part of the 21st century will be recovered.
While the unemployment rate has steadily improved, it is still above the national average. In March of 2019, the national unemployment rate was 3.8 percent, while in the state of Michigan, it was 4.0 percent. Mid-Michigan has experienced the largest growth rate in the state, and according to forecasters, it looks like that trend will continue, moving forward. Industries that are expected to see the most growth include:
- Energy, due largely to research and development in clean energy
- Food and agriculture
- Transportation and mobility
- Healthcare industry
- Information and technology
In the state of MI, business owners are not legally required to carry liability insurance; but most entrepreneurs opt to invest in a General Liability or Business Owner's Policy (BOP). A commercial auto insurance policy is also required for any businesses that use motor vehicles to conduct any aspect of their business operations. Workers' compensation insurance is also required for any businesses with non-owner employees. While the following forms of coverage are not required, depending on the type of business you operate, they are recommended:
- Data breach insurance
- Business income insurance
- Commercial Umbrella insurance
Additional Resources For Real Estate Insurance
Learn about small business real estate insurance coverages including liability and commercial property policies for realtors, mortgage companies and more.
For real estate professional liability policies, the insurance company agrees to pay amounts the insured is legally obligated to pay as damages because of a wrongful act. However, this insurance must cover the wrongful act.
The insurance company not only has the right to defend any suit brought against the insured, it also has a duty to do so. That duty, which can be very expensive, does not apply to suits brought for wrongful acts that this insurance does not cover.
What type of coverage is available for real estate agents who provide insurance advice? Any claim related to the sale or purchase of insurance is not covered. In addition, there is no coverage for any recommendations or advice regarding insurance or any failure to procure or maintain appropriate insurance.
Who is considered an insured under the Real Estate Agents and Brokers Professional Liability Policy? The named insured is an insured. The named insured is the entity or individual listed on the declarations. There can be multiple named insureds.
Any entity listed in the application as a predecessor organization is an insured. The named insured must be the entity's majority successor of interest with respect to the predecessor organization's financial assets and liabilities.
Are Real Estate Brokers Professional Liability policies written on an "occurrence" or a "claims-made" basis? Insurance is written on a claims-made basis, requiring that a claim must be reported to the insurer during the policy period or during the extended reporting period.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income with Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage abd Stop Gap Liability.
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