E & O insurance is a topic that elicits two responses: I don't like it, or it's necessary to protect my business interests. As a third party, commercial management firm and Accredited Management Organization (AMO) through the Institute of Real Estate Management, we are required to maintain E & O insurance. (I would do it without the requirement). It protects my company in the event of a claim by a client that we made an error under the provisions of the management contract. There is usually a large deductible; but, it covers cost beyond that for attorneys and awards, up to a certain limit.
Employee dishonesty would protect and owner against losses as a result of employee theft of client's monies. As a hypothetical: "Betty, who has a gambling habit, has been taking $x,xxx,.00 a month from 7 client's accounts through fraudulent invoices and payments to a fictitious company. Paul, unaware of Betty's habit, promptly investigates those accounts when Kelly asks why the monthly expenses have escalated. Betty breaks down and confesses. Paul calls the insurance company, fires Betty, and reimburses the client's accounts for the over billings or fraudulent amounts. Paul waits for the insurance check to reimburse him.
On the contractors, laborers issue, I would require that the provider shows proof of insurance; however, this might limit the number of service providers that do "handiman" work. In the commercial world, I do not allow vendors on the premises unless they have their own insurances that protect the owners and take care of their laborers.
Go to IREM.org and I believe their library includes general books relating to property management of residential and commercial.
Again, ask for references, look for licenses, and ask that they carry insurance protecting you against their actions. It is up to you to provide general liability for "trips and falls" and property casualty insurance.
I am not an attorney; but, as a licensee in the State of Arizona, I can draft legal documents relating to leases, purchase contracts, binding letters of intent, etc. Contracts are agreements between two or more parties, wherein, you can add any provision that you wish to negotiate. I like to give the example that you could include a provision relating to what the parties will wear on a certain day. A waste of time; but, anything that the parties agree to be bound by, that is probably not against the law, can be included in a contract.
On my side of the equation, I ask for indemnification against any and all claims from owners.
Edited Feb 9 2013, 07:04 by Administrator: Fixed bad formatting from quote