Property Manager Insurance Policy Information
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 property manager insurance coverage that will keep you and your business protected.
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.
Below are some answers to commonly asked property management insurance questions:
- What Is Property Manager Insurance?
- How Much Does Property Manager Insurance Cost?
- Why Do Property Managers Need Insurance?
- What Type Of Insurance Do Property Managers Need?
- What Does Property Manager Insurance Cover & Pay For?
What Is Property Manager Insurance?
Property manager insurance is a type of insurance policy that provides coverage for property managers who are responsible for overseeing rental properties.
This type of insurance policy typically includes coverage for property damage, liability, and legal expenses. It can also provide coverage for things like loss of rental income and damage to the property caused by tenants.
The purpose of property manager insurance is to protect the property manager from financial loss in the event of a claim made against them in relation to the property they manage.
How Much Does Property Manager Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small property managers ranges from $27 to $39 per month based on location, size, payroll, sales and experience.
Why Do Property Managers Need Insurance?
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. property manager insurance is what protects your business against third-party lawsuits and claims.
What Type Of Insurance Do Property Managers Need?
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.
Businessowners Policy (BOP) - 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.
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.
What Does Property Manager Insurance Cover & Pay For?
Property managers can be sued for various reasons, ranging from negligence to breaches of contract. Insurance policies can help protect property managers by covering legal expenses and potential settlements or judgments. Some of the common reasons for lawsuits and corresponding insurance coverage include:
Negligence: Property managers may be sued for not properly maintaining the property, leading to accidents, injuries, or property damage. Professional Liability Insurance (also known as Errors and Omissions Insurance) can help cover the costs associated with such claims.
Discrimination: Property managers could face lawsuits for violating fair housing laws, including discrimination based on race, religion, sex, or disability. Employment Practices Liability Insurance (EPLI) may cover legal expenses and potential settlements in such cases.
Breach of contract: If a property manager fails to fulfill their contractual obligations to a property owner, they could be sued for breach of contract. Professional Liability Insurance can help cover legal expenses related to these claims.
Wrongful eviction: Property managers may be sued for evicting tenants unlawfully or without proper notice. Commercial General Liability Insurance (CGL) can provide coverage for these types of claims, including legal defense costs and potential settlements or judgments.
Theft or damage: If a property manager is accused of stealing from or damaging a tenant's property, they may be sued. Commercial General Liability Insurance can help cover the costs of defending against these claims and any resulting settlements or judgments.
Personal injury: Property managers can be sued if a tenant or visitor suffers an injury on the property due to negligence or unsafe conditions. Commercial General Liability Insurance can cover the costs of defending against such claims, as well as any resulting settlements or judgments.
Libel or slander: Property managers may be sued for making false or damaging statements about a tenant, owner, or competitor. Commercial General Liability Insurance typically covers claims related to libel or slander, including legal defense costs and potential settlements or judgments.
By having the appropriate insurance policies in place, property managers can protect themselves from potentially costly lawsuits and ensure they have the financial resources to pay for legal defense and settlements or judgments, if necessary. It is essential for property managers to consult with an insurance agent to determine the right coverage for their specific needs and risks.
Commercial Insurance And Business Industry Classification
- SIC CODE: 7349 Building Cleaning and Maintenance Services, Not Elsewhere Classified, 6531 Real Estate Agents & Managers, 0782 Lawn & Garden Services
- NAICS CODE: 561730 Landscaping Services, 561720 Janitorial Services, 531311 Residential Property Managers, 531312 Nonresidential Property Managers
- Suggested Workers Compensation Code(s): 0917 Residential Cleaning Services by Contractor - Inside, 9014 Janitorial Services by Contractors - No Window Cleaning Above Ground Level & Drivers, 9012 Building or Property Management - Property Managers and Leasing Agents & Clerical, Salespersons, 9015 Building or Property Management - All Other Employees
7349: Building Cleaning and Maintenance Services, Not Elsewhere Classified
Division I: Services | Major Group 73: Business Services | Industry Group 734: Services To Dwellings And Other Buildings
7349 Building Cleaning and Maintenance Services, Not Elsewhere Classified: Establishments primarily engaged in furnishing building cleaning and maintenance services, not elsewhere classified, such as window cleaning, janitorial service, floor waxing, and office cleaning. General contractors and special trade contractors primarily engaged in building repair work are classified in Division C, Construction.
- Acoustical tile cleaning service
- Building cleaning service, interior
- Chimney cleaning service
- Custodians of schools on a contract or fee basis
- Floor waxing service
- Housekeeping (cleaning service) on a contract or fee basis
- Janitorial services on a contract or fee basis
- Lighting maintenance service (bulb replacement and cleaning)
- Maid service on a contract or fee basis
- Maintenance, building: except repairs
- Office cleaning service
- Service station cleaning and degreasing service
- Telephone booths, cleaning and maintenance of
- Venetian blind cleaning, including work done on owners'premises
- Window cleaning service
6531: Real Estate Agents & Managers
Division H: Finance, Insurance, And Real Estate | Major Group 65: Real Estate | Industry Group 653: Real Estate Agents And Managers
6531 Real Estate Agents & Managers: Establishments primarily engaged in renting, buying, selling, managing, and appraising real estate for others.
- Agents, real estate
- Appraisers, real estate
- Brokers of manufactured homes, on site
- Brokers, real estate
- Buying agents, real estate
- Cemetery management service
- Condominium managers
- Cooperative apartment manager
- Escrow agents, real estate
- Fiduciaries, real estate
- Housing authorities, operating
- Listing service, real estate
- Managers, real estate
- Multiple listing services, real estate
- Real estate auctions
- Rental agents for real estate
- Selling agents for real estate
- Time-sharing real estate: sales, leasing, and rentals
Description for 0782: Lawn and Garden Services
Division A: Agriculture, Forestry, And Fishing | Major Group 07: Agricultural Services | Industry Group 078: Landscape And Horticultural Services
0782 Lawn and Garden Services: Establishments primarily engaged in performing a variety of lawn and garden services. Establishments primarily engaged in the installation of artificial turf are classified in Construction, Industry 1799.
- Bermuda sprigging services
- Cemetery upkeep, independent
- Garden maintenance
- Garden planting
- Lawn care
- Lawn fertilizing services
- Lawn mowing services
- Lawn mulching services
- Lawn seeding services
- Lawn spraying services
- Lawn sprigging services
- Mowing highway center strips and edges
- Seeding highway strips
- Sod laying
- Turf installation, except artificial
Property Manager Insurance - The Bottom Line
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.
To find out exactly what type of auto service and repair shop insurance you need and how much coverage you should have, speak to a good insurance agent to go over your options.
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.
- Corporate Office
- Home Inspectione
- Property Manager
- Real Estate Agents
- Real Estate Appraiser
- Specialty Real Estate
The real estate industry involves a lot of investment, both in terms of finances and time. Therefore, it is important for real estate professionals to protect themselves and their assets with business insurance.
One major reason why the real estate industry needs commercial insurance is to protect against lawsuits. As a real estate professional, you may be sued for various reasons such as property damage, injury on the property, or even discrimination. Insurance can provide financial protection against these types of legal issues and help cover the costs of defending against a lawsuit.
Another reason why commercial insurance is important in the real estate industry is to protect against natural disasters. Homes and other properties can be damaged by natural disasters such as hurricanes, tornadoes, and earthquakes, which can lead to costly repairs. Insurance can provide financial assistance to cover these repair costs and help real estate professionals get back on their feet after a disaster.
Finally, insurance is important for the real estate industry because it can help protect against financial loss. For example, if a real estate investment goes sour or a property is not rented out as expected, insurance can provide financial assistance to help cover the losses.
Overall, the real estate industry needs business insurance to protect against legal issues, natural disasters, and financial loss. Without insurance, real estate professionals may face significant financial and legal risks that could impact their business and livelihood.
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.