Property managers fill a variety of roles while overseeing the performance of their residential or commercial properties. Coordinating maintenance issues, finding high quality tenants to fill vacancies, and collecting rents are only a few examples of the responsibilities that fall to the property manager. Property owners and tenants rely on their managers to provide a valuable professional service, but the role of trusted professional carries its own unique risks.
It is important to understand that a standard general liability policy does not protect property managers from all potential claims. The purpose of a general liability policy is to cover claims resulting from bodily injury and property damage, but not claims resulting from a failure to provide a professional service. A professional liability policy, also known as an errors and omissions policy, can help protect a property manager from their unique risk exposure.
What exactly does a Property Management Professional Liability policy cover? Here are a few examples of when a professional liability policy would be necessary:
- Tenant Discrimination - A property manager declines a potential tenant’s application. The potential tenant sues the management company claiming the denied application was discriminatory and violated their rights as a protected class (i.e. race, religion, gender, handicap, etc.).
- Mismanagement of Funds - Current and former tenants of a building bring a suit against the property management company claiming interest owed to them on their deposit funds was not properly distributed.
- Wrongful Eviction - The evicted party brings suit against the property management company claiming the proper steps of the eviction process were not followed.
- Negligent Upkeep - The value of the condos in a building drop due to high vacancy rates and poorly maintained common areas. The residents file a lawsuit against the management company claiming the manager was negligent in their duties which caused the loss of value.
These are only a few examples of the unique risks faced by property management professionals, none of which are covered by a standard liability policy.
If you would like more information on professional liability or the unique challenge of insuring a property management business, please reach out to the Real Estate and Hospitality Industry Group at Hausmann-Johnson Insurance. We can help review your current exposures and provide a comprehensive risk management program tailored to your business’ needs.