More and more often todays quality propert manangers are asking clients to list them as an 'Additional Insured' on their landlord insurance policy. This may seem odd or confusing but there are actually some very good reasons to do this, as well as some benefits you may want to explore.
Adding your property manager as an Additional Insured is often overlooked or thought to be unnecessary, but it truly is an important part of risk management for all parties involved.
When your property manager acts on your behalf they take on a lot of risk, screening tenants, placing tenants, collecting rent and responding to issues. While a good property mananger will already have plenty of insurance on their own sometimes it doesn't extend to the actual house or many problems that may be involved.
So, it's always important to ask: What kind of insurance does my Property Manager have?
Like most any business property managers usually carry professional liability insurance - often called Errors and Omissions insurance - in addition to General Liability insurance. This protects that manager and their client from financial losses directly related to a mistake on the managers part like wrongful eviction, hiring an unlicencesed contractor, or other actions they may undertake specifically related to their industry. General Liability insurance differs from E&O insurance in that Errors and Omissions only covers the specialized services offered by the manager, whereas Liability only covers routine business items.
What does "Additional Insured" mean?
When you add your property mananager as Additional Insured on your policy it means that any coverage you have is extended to them. Please note, Additional Insured and Additional Interest are NOT the same thing as Additiona Interest does not extend covered but simply means the mananger will receive notification when changes are made to the policy.
So, why should you add your Property Manager as an Additional Insured on your landlord policy?
When you hire a property manager they take on a wide variety of different responsibilities and interact with tenants on your behalf. Usually they don't have any financial interest in your property even though they take on the same risks as you the homeowner would. Things can happen, things can go wrong, even in the best situations and generally the property manager will be the target of much litigation along with the landlord.
Since E&O insurance and general liability do not protect against claims concerning the property itself manangers are left vulnerable to claims arising directly from the home. Some exmaples of this include:
Injury on the property
Fire or smoke damage
Damage from pets
Adding the property manager ass Additional Insured only helps make the claims or litigaton process easier. With one policy covering both parties they are able to present a more unified defence in the courts eyes and with one insurance company representing both the process is not only much more streamlined but also reduces costs.
Without this Additional Insured protection the property manager would have to cover any expenses up front and then seek reimbursement from the property owner directly under their indemnification clause which is a much more time-consuming and costly process.
How to add your Property Manager as an Additional Insured
It's very common these days for property managers to be listed as Additional Insured on a landlord policy; most insurance companies understand that adding the property manager to their clients policy is in everyones best interest and will do so for little to no additional cost. The best course of action is to talk to your insurance agent to find out how you can add your property manager most effectively - often it only takes a simple request and signature.
Remember! Make sure your insurance person understands you are requesting that your property manager be added as ADDITIONAL INSURED, not only as as Additional Interest.
And, as always, if you have any questions or concerns about your property and its manangement we are here to help!