Managing the property of clients can be very rewarding. As professionals, we always have the best interest of our clients in mind. We must also consider many factors, such as awareness of all of the potential risks we may face and how to protect the business. The risks may vary but can include vandalism, theft, legal and/or lawsuit compensation, fire, and so on. Having adequate insurance coverage helps to protect our assets and keeps the business running.
We also require the vendors that we hire to supply insurance. This protects the property owner, property management, the tenant, and of course the vendor. This may include auto liability or a general liability policy. Ensuring that each one of these vendors has adequate coverage in line with their type of business operations is key.
Some examples of insurance for a property manager and vendors include:
Property Management- Professional Liability Insurance(Sometimes called Errors and Omissions insurance or E&O) The types of claims that fall under professional liability may include: Tenant Discrimination- a potential or current tenant claims that property wasn’t rented to them or faced harassment based on race, color, religion, sex, sexual orientation, marital status, children, or national origin. Wrongful Eviction- While the lease is still valid, a tenant believes they were unlawfully evicted. They may sue for damages such as the cost of moving, lost wages, the cost of the replacement lease/deposits, etc. Property Damage by Error-failure to inspect fire extinguishers and fire caused damage to the property where it could have been prevented with a fire extinguisher. Failure to investigate complaints or maintenance requests(such as noise, pets, pet, plumbing) that may result in further damage to property.
- General Liability Insurance-The types of claims that fall under General Liability may include: Property damage- The example is similar to the Professional Liability claim. Damage was caused to the property whether it be a failure to inspect, investigate or mitigate. It also includes accidentally damaging a tenant's property during a showing or walk-through. Resident injury- This includes failure to maintain safe public premises for tenants and guests such as handrails, trip and fall hazards, snow and/or ice removal (depending on the lease contract) electrical hazards, environmental hazards.
- General Liability Insurance- sometimes called Commercial General Liability Insurance. Two of the main concerns with a General Liability Policy are: Property Damage- a vendor damages the property while performing a service or maintenance request. This could be accidental or negligence. Customer or tenant injury- ie: if you tripped over a vendor's toolbox and needed medical attention. Commercial Auto Liability- covers property damage or injury caused by a vehicle used on the job.