It’s becoming more and more common for a Property Manager to require the Landlord to list them as an additional insured on their insurance policy. But why? What are the benefits?
What insurance policies should my Property Manager have?
Like any service industry that provides a specialized service, Property Managers often carry professional liability insurance, often referred to as Errors and Omissions (E&O) Insurance. This insurance is designed to protect the Property Manager from claims against invasion of privacy, wrongful eviction, hiring unlicensed contractors, and other similar actions specifically related to the industry. Essentially, this insurance protects the tenant and Landlord from a financial loss that is directly related to a mistake made by the Property Manager.
It’s important to note that E&O insurance covers specialized services offered by the Property Manager and should not be confused with General Liability insurance. The difference between the two is that General Liability Insurance is intended more for the day to day business practices of a company regardless of the industry. In most cases, a Property Manager should have both E&O Insurance and General Liability Insurance to effectively cover their liability for both the day to day business and special services that they provide.
Why does my Property Manager need to be added as an additional insured?
When a Property Manager is hired, they perform a variety of different services on behalf of the Owner. In general, the Property Manager does not have a financial interest in the home as they are not part Owner. However, they do take on the risk and liability as if they were a Homeowner. Assuming the Property Manager does carry E&O Insurance and General Liability insurance, this only offers protection from claims that are a result of the services provided by the Property Manager. It does not offer any protection against matters concerning the home itself.
So in essence, the Property Manager assumes all the liabilities of a Homeowner but their insurance policies do not offer the same type of protection as a Landlord insurance policy. This leaves them vulnerable to claims and lawsuits arising from the real estate property itself. Some examples of where the Property Manager would not be covered by their insurance policy include someone injuring themselves at the property, burglary, fire, water leaks, etc.
A typical Landlord insurance policy will protect the Homeowner against claims arising from these examples, however coverage is not provided to the Property Manager through their E&O Insurance or General Liability Insurance. To solve this problem, many Property Managers now require the Landlord to add the Property Manager to their insurance policy as an additional insured which then extends this coverage to the Property Manager. Because the manager handles most of the day to day decisions on the home, they are frequently the first party named when a tenant or visitor files an injury claim, and naming them on the policy means both parties are defended under one policy instead of fighting the claim separately.
Tips when talking to your insurance agent
Special consideration needs to be taken when discussing this with your insurance company as wording is very important. The insurance industry uses specific terminology and one word can make a big difference. Some insurance companies will offer to add the Property Manager as an additional interest, which is not the same as an additional insured. Additional interest essentially means they will notify the Property Manager of policy renewals, cancellations, or changes in coverage. It does not extend coverage. When talking to their insurance agent, the Landlord needs to specify that they want their Property Manager added as an additional insured.
There are some insurance companies that do charge to add a Property Manager as an additional insured for a small fee. However, not every company does this and every insurance company is different. If your insurance company charges for this service, ask them what they charge and then shop around. Even though they may charge for this service, it may still be cheaper than other policies that do not charge to add the Property Manager as an additional insured.
Do note that most Property Managers will not offer to pay the difference in price to add them to the policy as most management companies require the Owner to provide this coverage at their expense. This is mainly due to the fact that there are insurance companies which do not charge for this service and ultimately the Homeowner chooses which insurance company they go with. If the Homeowner chooses a company that charges for this service, the Property Manager should not be penalized for that decision.
How to add your property manager as an additional insured
The mechanics are simple once you know what to ask for. Here is what to have ready when you call your agent:
- What to request: an “additional insured” endorsement on your landlord/dwelling policy — not an “additional interest.”
- Information to provide: the management company’s exact legal name and mailing address.
- Typical cost: little to nothing with most major carriers; a handful charge a small endorsement fee.
- Proof to send your manager: a Certificate of Insurance or endorsement page that names them as additional insured.
- If your carrier refuses: some managers offer coverage through their own master general liability policy, often in the range of roughly $10–$15 per month.
- Keep it current: re-issue the certificate at each policy renewal so coverage never lapses.
Here is a brief summary of why landlords should list their property manager as an additional insured:
- Yes, my Property Manager should have Errors & Omission Insurance.
- Yes, Property Manager should have General Liability Insurance, Yes, without a shadow of a doubt.
- Yes, it is very common for Property Managers to require a Landlord to add them as an additional insured; at least the ones with more knowledge and experience, which arguably would be the better ones as they understand risk and liability (which is the number one reason you hired a Property Manager in the first place).
- No, not all insurance companies allow Landlords to add their Property Manager as an additional insured.
- Yes, some insurance companies do charge to add a Property Manager as an additional insured.
- No, not all companies charge to add a Property Manager to the policy and in fact, many of them do not.
- No, your Property Manager will most likely not pay to have them added to your insurance policy as an additional insured because this is typically a requirement of the Landlord.
Frequently Asked Questions
Why should I name my property manager as an additional insured?
Because the property manager takes on the liabilities of a Homeowner, but their own E&O and General Liability insurance does not cover claims arising from the property itself — someone injuring themselves, burglary, fire, water leaks. Adding them as an additional insured extends your Landlord policy to them, so both parties are defended under one policy instead of fighting the claim separately.
How do I add my property manager as an additional insured?
Call your insurance agent and ask for an “additional insured” endorsement on your landlord policy — not an “additional interest,” which only notifies the manager of renewals or changes and does not extend coverage. Provide the management company’s exact legal name and mailing address, then send your manager the Certificate of Insurance or endorsement page that names them.
How much does it cost to add a property manager as an additional insured?
With most major carriers it costs little to nothing, though a handful charge a small endorsement fee. If yours charges, ask what it is and then shop around, as it may still be cheaper than a policy that adds the manager for free. If your carrier refuses, some managers offer coverage through their own master general liability policy, often roughly $10–$15 per month.
Have a question about coverage on a home you own? You can reach our team through our property management office, or browse current homes on our rental list.
Disclaimer: This article is general information, not legal or insurance advice. Every policy and every state is different, so it is always recommended that you speak to a licensed insurance agent and a local attorney to learn how these rules apply to you and your home.