Insurance for Property Managers
As a property manager, you could be tasked with a handful of duties, from screening applications, collecting rent to making repairs on any given day. While having a busy schedule may be better for business, it can open more room for mistakes, and it is essential to protect yourself from any potential liabilities.
Whether you manage a commercial building or residential apartment complex, risk management is key to the survival of your business.
At Zensurance, we want to make insurance as accessible as possible. We wrote this guide to help you navigate the basics of property management insurance.
What is Property Management Insurance?
Property Management Insurance is a comprehensive policy package designed to protect property managers against specific risks they may encounter during day-to-day business operations, such as negligence, errors, omissions, third-party property damage, and bodily injuries.
What does it cover?
Property managers have their own unique set of risks, and it is critical to have insurance that caters to the specific needs of your business.
Generally, a comprehensive Property Management Insurance package will typically include the following:
- Errors and Omissions Insurance (E&O): Also referred to as Professional Liability, E&O Insurance protects property managers from claims of negligence, delinquencies, or failure to deliver services as promised. E&O can provide financial coverage, including legal fees and monetary judgments. This policy is critical, as lawsuits may be filed by either your client (e.g., Property Owner) or their tenants. Here are a few common coverage areas that an E&O policy could cover:
- Tenant Discrimination: Allegations of discrimination that occur during any process involving tenants, such as the application approval process, lease changes, or alterations in rent prices, can result in lawsuits. Discrimination may include unfair treatment due to age, sex, gender, race, religion, disability, sexual orientation, or marital status.
- Wrongful Evictions: Evicting tenants is a highly stressful situation that can create tension between you and the resident. If the tenant feels they were wrongfully evicted, they can take you to court.
- Negligence or Errors: Property managers have many responsibilities, and any actions perceived to be negligent or cause financial loss to the third party could face legal action.
- Commercial General Liability Insurance (CGL): Commercial General Liability coverage protects your business from lawsuits alleging third-party property damage or bodily injury. Common coverage areas that a CGL policy could cover include:
- Third-Party or Resident Injury: Slip-and-fall claims are the most common injury-related liabilities that property managers face. CGL could cover the legal expenses and medical fees, regardless of the outcome. Property managers may also be liable for any claims made by visitors that does not reside in the property.
- Property Damage: Maintenance and repairs often require property managers to conduct work inside a tenant’s room; if the work performed causes damages to their property, they could sue. CGL could cover the cost to replace or repair damaged property up to the policy’s limit.
- Cyber Liability Insurance: With all the confidential information you store electronically, you are at high risk of cyberattacks. The costs of dealing with cyber breaches, ransom payments to hackers, and subsequent network repairs can be costly. Cyber Liability Insurance can provide financial coverage to help you navigate and recover from these types of electronic incidents.
- Commercial Property Insurance: If your business owns assets or any physical property, then Commercial Property Insurance is important coverage to consider. This policy provides financial coverage for lost or damaged physical property due to external disasters including, fire, theft, or vandalism. Coverage may apply to the physical building (if owned), equipment, fixtures, supplies, and inventory.
Who needs it?
Regardless of property management services offered, all licensed property managers are required to carry E&O insurance. The property that you manage will all have its specific insurance requirement and coverage limits.
We’ve insured more than 1,000 real estate management professionals. Some of our clients include:
- Commercial / Industrial Property Management
- Residential / Condo Property Management
- Retail Property Management
- Vacation Rental Properties
How much does it cost?
The cost of property management insurance typically starts at $2,500/year for an Errors and Omissions Insurance and Commercial General Liability Insurance policy with a $2M combined limit.
There are several factors considered when determining a price for your insurance policy package, including:
- Value of Properties Managed
- Number of Buildings Managed
- Types of Property and Services Managed
- Years of Operations
- Years of Experience
- Annual and Projected Revenue
- Number of Employees
Common claims scenarios
Frequently asked questions