Property Management Insurance Coverage Explained
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Property Management def: Property management is the operation, control, and oversight of real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its useful life and condition. This is much akin to the role of management in any business. Source: Wikipedia
Who Needs Property Management Insurance?
If you own or manage any property and/or buildings, then you need Property Management Insurance to ensure that you are properly covered. It is common for property managers to oversee the management of residential buildings including condos or apartment complexes, or commercial buildings including office buildings or main street properties.
What Does Property Management Insurance Cover?
Common coverages included in Property Management Insurance is property coverage for the physical building and/or property, commercial general liability, and errors & omissions liability (also known as professional liability). In addition to ensuring that your building and/or property is protected from common perils such as fire, it is typical to also have coverage for rental income replacement, sewer backup coverage, tenant damage coverage, and on premises pollution coverage, just to name a few.
Property Management Insurance coverage also protects property managers against allegations of negligence, claims and damages through the errors & omissions /professional liability coverage. Allegations of negligence resulting in bodily injury and/or property damage is covered by the commercial general liability coverage.
The errors & omissions/professional liability portion of Property Management Insurance Coverage policies are usually issued on a “claims-made” basis. What this means is that coverage is triggered when a claim is filed and you report it to the insurance company. Policies typically have a one-year term, with an annual premium and deductibles on a per-claim basis. In contrast commercial general liability coverage is almost always written on a per occurrence basis (click here for the differences).
Property Management Insurance Coverage Claims Examples
- Wrongful Eviction: As a property manager having the responsibility of evicting tenants when and/or where necessary, you have recently evicted a tenant. In evicting the tenant you did not follow the proper eviction process. The evicted tenant is now bringing forward a claim against you.
- Tenant Discrimination: A potential tenant is claiming that you did not rent a property to them based on gender, race, or religion.
- Resident Injury: A tenant or visitor falls and injures themselves on your property.
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