| NYC Business Group
What Type of Insurance Policies Do Property Managers Need?
Numerous risks are involved if you are in the real estate business as a property manager. Therefore, investing in the right insurance policies is prudent to protect yourself, your business, and the properties you manage. Are you wondering whether you need property management insurance? Every property manager involved in the following activities should acquire appropriate coverage and policies:
- Managing rental property for others
- Renting or leasing residential property to others
- Contracting services, for example, hiring property maintenance services for a property
Suppose someone is injured or their property damaged from a management mistake or oversight, or a management error results in claims like wrongful eviction or discrimination. You could face a lawsuit or financial loss. In extreme cases, if your property is damaged by weather-related risks, vandalism, or theft, you can rest assured you are protected from these inherent risks. This article explains the types of insurance coverage you need as a property manager.
General Liability Insurance
General liability is a must-have insurance policy because it protects you against claims related to personal injuries or property damage. Also known as business liability insurance, this policy covers legal fees, medical costs, compensation, replacement, and repairs.
Errors and Omissions Insurance
Since you offer professional services, consider having professional liability insurance, also called errors and omissions. With E&O, property managers are protected against outside claims, including invasion of privacy, wrongful eviction, or hiring unlicensed contractors. Typically, this policy covers legal fees if you make a professional mistake, for example, giving wrong information, omissions, or negligence. Without coverage, property managers are prone to numerous financial risks, including client allegations. It is important to note that this policy also covers any professional work or services you previously offered. This means that you will get coverage if someone decides to sue for an alleged old error.
Worker's Compensation Insurance
You don't need this coverage if you are a sole proprietor, i.e., work alone. However, if you employ several people, you must purchase worker's compensation insurance. In some states, employers must have this coverage. This policy saves your business from financial losses if there are work-related injuries or illnesses. Worker's comp covers the following:
- Missed wages
- Medical expenses
- Death expenses
- Vocational rehabilitation
If you need clarification on worker's comp in your state, consider talking to a reputable insurance agent.
Cyber Liability Insurance
Property managers handle and store personal information for their clients and tenants. Cyber risk and data breach insurance is a good investment if you run a website or receive personal data from property owners and tenants. Here are some of the things the policy can cover:
- Investigative costs - this includes the costs of investigating cybercrime and informing involved parties.
- Lost income – if the attack hinders your daily operations, the policy covers the financial loss.
- Repair and restoration costs – with the extent of the cyber attack, your insurer will ensure your business runs smoothly again.
- Legal fees – if you face a lawsuit, the policy covers legal damages and fees. The policy can cover court judgment or settlement depending on your insurer and type of coverage.
Tenant Discrimination Insurance
Property managers deal with numerous clients and tenants and can face hefty lawsuits. Tenant discrimination insurance protects property managers against discrimination allegations. Some discrimination allegations tenants or clients make include race, sex, religion, age, ethnicity, and sexual orientation. With tenant discrimination, you can know that you are covered against allegations made by tenants or prospective tenants. You might be fair, but you will encounter people who like trouble, and you can incur substantial financial losses without the policy.
Conclusion
Lawsuits related to property management are common, and without proper protection, you can expose yourself and your business to unnecessary risk. Remember that your clients and tenants trust that you have invested in the right insurance policies to protect themselves and their property. Investing in the right policy is good because it shows you are professional and responsible. Therefore, it can be an incentive when clients or tenants seek property managers to work with.
Finally, the insurance cost varies depending on the size and scope of your business or operation. Therefore, talk to an insurance agent to determine the estimated insurance budget. Typically, your insurance cost will be determined by the number of employees, location, number of properties you manage, size, and value. Purchasing the right property management insurance is essential regardless of your business' size. The investment will save you hundreds, thousands, or even millions of dollars in the long run. Property managers should not take chances. Talk to an insurance agent to know how you can get started.