What does “Additional Insured” mean?
When you add your Property Manager as an Additional Insured on your landlord policy, it means that any coverage you have is extended to them. It is important to note that ‘Additional Insured’ and ‘Additional Interest’ are NOT the same thing. If your insurance company adds the Property Manager as an Additional Interest, it does not extend coverage, but simply means that the property manager will receive notification when changes to the policy (such as cancellation or renewal) occur.
Why should I add my Property Manager as an Additional Insured on my landlord policy?
When a Property Manager is hired, they take on countless different responsibilities and have frequent interactions with tenants. Typically, they do not have a financial interest in the property, but they take on the same risks as the homeowner. As a result, when something goes wrong, they are often the target of any resulting litigation along with the landlord.
What kind of insurance does my Property Manager have?
Like any business in the service industry, Property Managers typically carry professional liability insurance (sometimes called Errors and Omissions, or E&O, insurance). This protects both the Manager and the client from financial losses directly related to a mistake on the Manager’s part. Examples might include wrongful eviction, hiring unlicensed contractors, or other actions specifically related to the industry.
In most cases, a Property Manager will also carry general liability insurance, which covers the day-to-day business operations of a company, regardless of industry. It is important to note the differences between the two, as E&O insurance only covers the specialized services offered by the Property Manager, while general liability only covers routine business matters.
From the owner’s standpoint, listing the Property Manager as an Additional Insured helps make the claims or litigation process easier. When one policy extends to both parties, they are able to present a unified defense, with one insurance company representing both. It not only streamlines the process but reduces costs all around.
Without an Additional Insured endorsement, the Property Manager would have to cover any expenses up front and then seek reimbursement from the property owner directly under their indemnification clause – a much more time-consuming and costly process.
Talk to your insurance agent to find out how you can effectively and affordably add your Property Manager to your landlord policy – often all it takes is a simple request and your signature on an e-form.