Insurance is provided as protection to prevent loss in the event of an unforeseen circumstance. No matter what sphere of insurance you are speaking of, the ultimate goal is immunity. As a Landlord you deserve a sense of wellbeing knowing that your Property Management Company is just as protected as you are.
Many homeowners inquire as to why Property Management Companies require they be listed as “Additional Insured” on their landlord insurance policy. This is because experienced Property Managers are aware of the civil liability issues that can and do unfortunately arise in leasing and managing your investment home.
Their goal is to protect their clients and eliminate financial burden.
Property Managers do carry Professional Liability Insurance more commonly known in the field of Real Estate as E & O Insurance. This specific type of coverage protects against: negligence, fair dealing, misrepresentation, and inaccurate advice; however E & O policies exclude protection against civil liabilities. Property Managers are at a loss for obtaining civil liability coverage because they do not have ownership in the real estate they manage. If a civil law suit were filed, the Property Management Company would be without indemnity against the legal claim. This loophole actually puts you, the landlord, at a risky disadvantage. Reality is that the Property Manager is contracted and ultimately employed by the owner, who bears sole accountability for the property in litigation.
The solution to this obstacle is as simple as listing your Property Management Company as additional insured on your Landlord’s Insurance Policy. This formality will close the gap in coverage and mitigate the financial risk. Several insurance companies will add this inclusion to your existing Landlord policy at no additional cost. Be certain when making this addition to your policy that the Property Management Company is specifically named as “additional insured” on the declaration. Being listed as “additional interest” or “additional party” will not extend the coverage you are seeking. Be very clear when discussing what you require from your insurance agent and then rest assured in confidence knowing that you have adequate coverage on your policy.