When it comes to insurance, does exposure to risk keep you up at night? As a property manager, it cannot be overstated how important it is for you to understand the types of insurance you should carry to protect your business, yourself and the properties you manage. This is of particular concern if you are involved in the following activities:
- Renting or leasing commercial real estate to others
- Managing rental properties for others
- Contracting service for property owners (i.e. hiring/supervising property maintenance for rental properties)
It is no surprise lawsuits related to property management are all too common. Your clients also trust and expect you to carry the right type of insurance to protect their well-being. Having the proper coverage in place can serve as an incentive for property owners to choose your firm to manage their properties. It demonstrates your professionalism and attentiveness, along with raising your credibility within the industry.
Property managers should have insurance to cover their business, their clients, their tenants and of course the properties they manage. While a property manager’s insurance needs are similar in some ways to other businesses (i.e. property, liability, and workers’ compensation), there are many ways in which they are unique.
Errors and Omissions Insurance
Like any specialized industry, property managers should carry professional liability insurance, often referred to as E&O insurance. Because there are thousands of ways a real estate transaction can go awry, there are also countless possibilities for bringing a lawsuit against your firm. For example, you could be sued if a disgruntled buyer gets cold feet and claims you did not act in their best interest; if your advice fails to meet a client’s perceived expectations; you fail to properly document decisions, actions or correspondence; a client contends you did not disclose water damage in the building and attempts to recover the cost of mold remediation from you. Not to mention wrongful eviction, hiring unlicensed contractors, misrepresentation and a property owner’s loss of income.
General Liability Insurance
If you visit clients or they visit you, you need GL insurance. It protects you if someone gets hurt or their property is damaged and it’s your fault. All it takes is a prospective tenant to sprain an ankle in your office from tripping over a cable. Not only could the deal fall through, you could be subject to a lawsuit. GL can also cover medical bills, legal costs and helps keep your reputation in tact- the one you’ve worked hard to earn! Say in a weak moment you are overheard making a remark about a potential tenant that is taken out of context. It somehow gets back to them and they decide to sue you. Having GL coverage can provide you legal defense plus damages. This stuff happens, and we all know people sue for anything these days.
Tenant Discrimination Insurance
Tenant discrimination is typically not covered by general liabilities policies, and there are a major concern for property managers. It should not be overlooked, as it provides protection when current, prospective or former tenants allege wrongful discrimination on the basis of race, color, age, gender, religion, sexual orientation, national origin, even immigration status. This can arise from refusing a lease, either during the leasing process or during the course of the lease; refusing to allow access to the leased property, or in the perceived wrongful eviction of the leased property. Or it may be claimed you are in violation of the Fair Credit Reporting Act or similar statute. And of course, a tenant could say they suffered a non-physical injury from feeling humilated, emotionally distressed or harassed, even cyberbullied by you the property manager.
Insuring property managers is a specialty. Make sure you take time to identify a qualified insurance broker who as your trust advocate can access the markets, as well as leverage your strengths to get the most out of your premium dollars. This way you can focus on growing your business, taking care of your clients and enjoy peace of mind.