Property management insurance, put very simply is a specialized insurance cover for people who manage a property. Why is it needed? Well, for a start, jobs that involve overseeing the daily operations of a building, pose certain kinds of risks. And these risks can be much higher than the risks posed by office jobs.
Property Management Insurance Risks.
These range from physical risks at the property to administration risks or tenant risks. Whether you own a small property or you own a multi-million dollar bungalow, the risk of physical damage or injury resulting from falls or accidents is always present. Other types of risks come from dealing with tenants, evictions, building maintenance, etc.
Tenants can sometimes create a risk to property managers. If, for example, tenants sustain an injury, while residing on the property, they may claim negligence and even take legal action. Administration risks often stem from missing the details of a lease agreement, incorrect claim handling, or missing agreed deadlines. This can again cost a huge amount of management time and money.
Then, of course, there is the ever-present aspect of market risk. There are several obvious factors linked with the future results of operations, based on variables, hypothetical facts, and assumptions. Whilst some involve a general understanding of financial and real estate matters, others pertain to unforeseen changes to the economy and financial markets. on a property manager’s job. This is why ensuring you have an adequate policy to protect you is super important, if you manage the following types of properties:
- Single-family homes
- Duplex &Multiplex properties
- Commercial property
- Apartment buildings
- Other rental homes
Types Of Property Management Insurance.
Arguably, specific insurance requirements vary from individual to individual and building to building. Factors such as a building’s location, its condition, or if it’s a commercial or residential property dictate the type of insurance. Another important factor to consider is whether the property is freehold or leasehold. Based on an evaluation of these variables, there are generally five types of coverage options, recommended for property managers.
Commercial General Liability
Regardless of the nature of its operations, every property management business should have this type of coverage. It protects the business owner and the business against third-party claims of bodily injury or property damage. And helps cover the costs of medical bills, legal bills, and the cost of property-repairs. This insurance protects property managers against the most common claims, including the following:
Tenant or resident Injury
If a resident who lives on your property falls and injures himself, he could potentially sue you for the damages. Even if you were not present at the time of their injury,
Similar to resident injury, this claim differs in one way: the claimant does not have to reside on your property to sue you. So, if strangers injure themselves while on your property, you could still end up with a lawsuit on your hands.
Third-Party property damage
If whilst visiting your tenant’s home, you accidentally break or damage something, they can potentially sue you.
Commercial Property Insurance
Commercial property insurance protects the physical assets of your business. These includes the actual building site and structure, furniture, supplies, and inventory. Having this coverage can help you with the costs associated with repairs and replacements. The coverage extends to other perils such as hurricanes, fires, lightning, theft, and vandalism.
Consumer Commission & Deposit Protection
This type of coverage is a must for any business, dealing with consumers’ private and financial information, such as bank details, online payments, and credit card details. On the one hand, Consumer Deposit safeguards your tenants in the event of fraud or misappropriation of their money. On the other hand, Commission Protection protects the property manager from missing out on any sort of commission due to said fraud or misappropriation. In addition, this coverage also protects from litigation resulting from members of your staff committing fraud or misappropriation.
Professional liability insurance comes highly recommended, specifically to protect property management businesses. Under the terms of this insurance, you can safeguard your business against the charges arising from claims, such as legal costs, settlements, attorney fees, and any other incumbent legal charges. The three most common claim scenarios covered under professional liability are as follows:
Even with careful placement, you may on occasion, need to evict a tenant. Evicting a tenant can be an expensive and cumbersome process at the best of times. requiring in-depth knowledge of state and local landlord/tenant laws. Property managers must initiate the necessary legal steps in the fastest possible time frame to minimize costs and get the property leased again. However, If a tenant believes you are evicting him for the wrong reasons, or if there are mistakes in the eviction process, they can take you to court. This can result in financial losses all around and expensive legal cases. Professional liability coverage helps to cover the costs associated with these types of lawsuits.
Discrimination claims occur if the tenant feels that you have acted unlawfully when choosing whom to rent to, or when specifying any other conditions. The Florida Fair Housing Act states that you cannot treat someone unfairly due to their gender, age, race religion, sexual orientation, marital status, pregnancy, or disability status. So, if a tenant (current, prospective, or past) feels they have been subjected to unfair treatment due to discrimination they can sue you.
Errors and Omission
Errors and omissions cover will protect you and your business from legal action resulting from your negligence, or one of your employees.
Property Management Insurance Is A Must.
In the real estate industry, a property manager can have a lawsuit on their hands in dozens of ways. Even though most property managers have a lawyer to deal with these problems, this property management insurance pays for all of the legal fees and court fees that come with any lawsuit. It protects against claims made by clients, no matter how trivial or baseless they are.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.