Property Management Company on Insurance?

Question

Thinking of turning my rentals over to property management company. The PM company requires me to add them to my homeowners insurance liability as co-insured. Is this a normal request?

Drew Sygit · Answer

PMC's cannot obtain liability insurance for "slip & fall" accidents by tenants, contractors, mailmen (just got sued for that!) on a property they do NOT have an ownership interest in.

So, just like a mortgage lender requires you to add them as "additinally insured" to your homeowners insurance, PMC's (at least the smart ones) will require you to add them as also in the same way.

We've heard, "additinally insured", called many names, but the concept is all the same.

John Underwood · Answer

I would check around other PM'S to see if there all doing this. They should have their own insurance in my opinion.

Bjorn Ahlblad · Answer

They can ask to be added as an 'additional interest'. Not as co insured that would be ridiculous!

Debbie C. · Answer

@Rhondalette W.

I did have a request from my current PM to add them to my policy. After discussing it with my insurance agent, I declined to add them.

Everyone should carry their own insurance policy, and we are fully insured including an umbrella policy. The tenants are required to have a rental policy and they do add the PM on as " additional interest" not as co-insured or as " additional insured". The insurance company will inform the PM if the tenant cancels the policy, that is all it is for.

I did call around at the time my PM requested this and some PM's were asking/requiring it but many were not. Check with your insurance agent and do what is right for you.

Nathan Gesner · Answer

If they are a good PM, they would be able to explain this to you.

The property manager is not insured for liability on the properties they manage. Someone slips and falls on your property, they're going to come after you, the property manager, and anyone else they possibly can to see how much juice they can squeeze. If you add them to you policy as "additional interest" or "additional insured" it will enable your insurance company to protect both of you. It does not change your coverage or premiums and it does not give them a financial interest if the house burns down. It simply protects them while they are managing your property.

Another benefit: they can monitor to ensure your home is properly insured. Any time there is a change to your policy, they'll receive notice. I've had a couple Landlords forget to pay their bills. I received notice they were getting ready to lose their policy and was able to notify the owner in time and get them back on track.

It's a good thing.

Jason Bott · Answer

@Rhondalette W. perfectly normal, and in fact, many insurance policies have this endorsement built into their policies, which reads as "Automatic Additional Insured" for PMs.

Andrea Hardaway · Answer

No sure what co-insured is. However, it is common to add the PMC as “additional insured”.  This ensures that any liability claims that arise while the property is under management are undeniably covered by your policy.

Scott M. · Answer

Added as additional insured is 100% common.  Co-insured I have never heard of.

Property Management Company on Insurance?

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