by Mike W. Smith, President
We are seeing increased exposures for insurance related issues for property managers. Almost all property manager’s E&O policies exclude coverage for any failure to place or procure any insurance for any client. The basis of the exclusion is that property owners and insurance agents should be held accountable for such claims not the property manager. Unfortunately, based on foreclosure rates and the economy, many property owners are not properly insuring their properties or have elected to drop the coverage altogether. This creates a significant risk for the property manager that is not covered by an E&O policy.
Example:
In the example of a slip and fall in a stairwell, typically the general liability policy for the building owner would respond to the claim and also extend protection to the property manager, if the policy is written correctly. Property managers are traditionally named in this type of suit. Since it is the intention of the general liability policy to cover this claim, E&O policies will most likely exclude this type of claim whether or not the actual policy is in force. This presents a significant uninsured risk for the property manager.
What can you do?
As a property manager you should insist on being provided a certificate of insurance from your clients. The certificate should specifically name the property management/real estate agency as an additional named insured and as a certificate holder. The certificate will not only protect you in the event they do not have insurance, but also should provide for you to be notified if the property owner cancels the coverage. Additionally, the property manager should put in place a procedure for getting updated certificates of insurance each year as certificates expire and property owners change polices.
I am advising a property management business on what lines of coverage they need to be fully covered. I know E & O coverage is a must for this type of risk. Do you know of any other coverages that might get over looked that are also a must for property managers to carry?
Your article was very enlightening.
Thank you for your valuable time!
Samantha Hawkins
Property Managers need several policies depending upon what they are managing . This can include a general liability, including hired and non owned auto, employment practices policy, crime and fiduciary policy. Each of those policies have issues that need to be addressed for a property manager. For example a crime policy would cover theft of assets by an employee, but you would need a third party extention to extend coverage to the client’s property, which is the important issue for a property manager. Please feel free to call us to discuss your needs.
Mike Smith
Axis Insurance Services, LLC
http://www.axisins.com