Protecting Your Property With the Right Insurance

Why Listing Your Property Manager as an 'Additional Insured' is Essential for Your Protection

As a property owner, you may have noticed that experienced, high-value Property Managers increasingly require clients to list them as an ‘Additional Insured’ on their landlord insurance policy. But what does this mean for you, and why is it so important? While some may view this as an unnecessary step, adding your Property Manager as an Additional Insured is a critical component of a comprehensive risk management strategy. This move not only protects your Property Manager but also safeguards you as the property owner.

Understanding the Risks Property Managers Take on Your Behalf

Property Managers handle numerous responsibilities on your behalf—tenant screening, rent collection, maintenance requests, and more. These tasks inherently carry a significant amount of risk. Although Property Managers typically carry their own insurance, it often doesn’t cover risks directly related to the property itself.

What Insurance Does My Property Manager Have?

Property Managers usually have professional liability insurance (also known as Errors and Omissions, or E&O, insurance), which covers financial losses arising from errors in their professional services—such as wrongful eviction or hiring unlicensed contractors. Additionally, most Property Managers carry general liability insurance, which covers the day-to-day operations of their business. However, it’s important to note that E&O insurance only covers professional services, while general liability only covers routine business matters.

What Does “Additional Insured” Mean?

When you add your Property Manager as an Additional Insured on your landlord policy, you extend your coverage to include them. This is different from listing them as an ‘Additional Interest,’ which simply means they would receive notifications about policy changes but would not be covered.

The Importance of Adding Your Property Manager as an Additional Insured

Property Managers, although not financially invested in your property, assume many of the same risks you do. When issues arise—such as theft, water damage, fire, vandalism, or injuries—they are often targets of litigation alongside you, the owner.

Unfortunately, the insurance that Property Managers carry often does not protect against claims related directly to the property. By listing them as an Additional Insured, you simplify the claims process and reduce costs by allowing both parties to present a unified defense under one policy. Without this endorsement, Property Managers may have to cover expenses upfront and seek reimbursement later—a costly and time-consuming process.

How to Add Your Property Manager as an Additional Insured

It’s increasingly common for Property Managers to be listed as an Additional Insured on landlord policies, and most reputable insurance companies understand the benefits of this arrangement. Usually, this can be done with a simple request and a signature on an e-form at little to no additional cost. However, it’s important to be clear with your insurance agent: make sure they understand that you need your Property Manager added as an ‘Additional Insured,’ not just an ‘Additional Interest.’

TIP: Share PropertyCraft's insurance binder with your agent. They may factor in the use of a professional management company into your policy.