Hi BP - I just had a potential property manager tell me that they don't carry insurance because they hire out maintenance and repairs. I'm new at this, but this seems like a giant red flag. If I were a property manager, I would want some basic liability coverage at a minimum to protect me from claims from both tenants (wrongful eviction, discrimination, etc.) and property owners (breach of contract, etc.).
I also want them to have coverage because if something really bad happened, like a major injury or death to a tenant, I imagine that their family would start suing everybody (owners, manager, contractor, etc.) and would go hardest after those who they think are most capable of generating a payout, i.e. the insured parties. Am I on track with this line of thinking?
I assume those of you who hire out PM ask to see proof of insurance? What exactly should I be looking for here in terms of their coverage types and amounts?
Your property management company should have the following insurance, Error and Omission Insurance (E&O), General Liability Insurance (minimum of $1,000,000 policy) and Workers Compensation (real important for management companies with on staff maintenance).
Hop this help.
And if they don't carry this insurance, does this transfer additional risk to me? It seems it would.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!