What You Need to Know About Property Managers Insurance
As someone who manages properties, you have a lot of responsibilities to juggle. From application screenings to collecting rent to making repairs, the work never stops. Nevertheless, the busier you become, the more room there is for errors and mistakes. Therefore, it is essential that you protect yourself and your business from any potential risks and liabilities.
Insurance Coverage Options
The key to property manager insurance is assembling an insurance portfolio that includes the exact type of protection that your business needs. As each business is unique, there are a few coverages you should examine carefully when creating your customizable insurance policy. Whether you manage a single rental unit like a house, a residential apartment complex or even a commercial building or two, knowing your business is safe is essential.
What is property manager insurance?
Property manager insurance is a customized insurance policy tailored to property managers. This policy is designed to protect their business from industry-specific risks, such as damages, negligence, errors, injuries and lawsuits.
Who needs property management insurance?
If you are a licenced property manager, you are required by law in Ontario to have errors and omission insurance and fidelity insurance.
Examples of managed properties include the following:
Errors and omissions insurance, also known as professional liability insurance, is absolutely essential for any business offering a service. It can be the most important coverage for you to have. This policy protects your business against claims of misconduct, negligence, failure to deliver a service, inadequate work, and more. Professional liability covers:
Errors, mistakes and oversights
Failure to meet deadlines
Failure to deliver your product/service as advertised
Failure to meet a standard of care
Breach of contract
Fidelity insurance protects your business in the event of employee fraud or theft. It covers events as simple as an employee stealing store property or cash from a register to as complex as a bookkeeper who has been quietly stealing money from the business over several years.
Commercial General Liability Insurance
Commercial general liability protects you, your business and your employees from legal liability against third-party bodily injury or property damage claims that occurred at your business. This policy covers the costs of medical bills, legal fees, and repairs or replacements and also protects you against any advertising and reputational injuries (e.g., slander, libel, copyright infringement).
What other coverages should property managers consider adding to their insurance policy?
Commercial Property Insurance
Commercial property insurance protects your business and the contents inside (e.g., equipment, files, inventory, etc.) by covering the financial loss from such perils as:
Property damage due to natural disasters, flood, fire, vandalism or theft.
Property damage or theft of electronics, equipment, company documents or employees’ personal belongings.
Inventory theft by employees.
Commercial property insurance can also include business interruption, which protects your business should you be unable to work due to an illness or injury and have to shut it down temporarily. This also helps offset ongoing costs from income losses, such as bills, employee wages, etc.
Directors and Officers (D&O) Liability Insurance
In the event of any allegations or lawsuits of wrongful acts or mismanagement, D&O liability insurance protects an organization’s directors and officers from personal financial loss. If your business is large enough to be governed by a board of directors, D&O liability insurance is a must. It protects the organization’s directors and officers from the following:
Breach of trustee duties
Failure to comply with federal or provincial laws or regulations regarding:
Misrepresentation to shareholders/creditors/etc.
Property managers store a lot of confidential information regarding their tenants. Most information these days is stored electronically, which opens you up to the risk of cyberattacks. Cyber and privacy liability insurance protects your business by covering damages and legal claims if your customers’ personal information is leaked or stolen due to a data breach, ransom attack or theft. It can also cover the costs of any necessary network repairs after a breach or ransom attack.
Commercial Crime Insurance
Commercial crime insurance protects your business from the misuse or illegal transfers of funds. This policy safeguards your finances from internal criminal acts, such as employees who have access to company funds and abuse it. Commercial crime insurance includes the following:
Computer fraud reimbursement
Forgery and alteration coverage
Equipment Breakdown Insurance
Equipment breakdown insurance covers financial costs for equipment that need repairs or to be replaced due to internal damage. While you have some coverage for external event damage under commercial property insurance, this policy covers internal damages, such as power surges, motor burnout, electrical shorts, operator errors and mechanical breakdowns. It covers a broad range of equipment that is crucial to operating your business, including the following:
Building elevator motors
Hot water boilers
Heating and cooling systems
Electric power distribution systems
Commercial Auto Insurance
If you use your vehicle to carry tools and equipment needed to maintain your rental properties, you should consider getting commercial auto insurance. While you likely have personal auto insurance already, if you get into an accident while on your way to one of your rental properties, your claim may be denied since you were using your vehicle for work. Commercial auto insurance includes the following:
Uninsured automobile coverage
Direct compensation-property damage
What kind of property management risks are there?
Here are five primary risks for property managers to consider:
Physical property risk
Every property manager must be aware of their property’s state and condition at all times. This is because physical property damage is a continual risk. Property managers need to perform periodic inspections and ensure that their buildings are maintained and repaired regularly and promptly by licensed professionals.
Managing tenants is probably the most considerable risk for property managers. There are so many variables to consider when you are responsible for others. Some tenants can be careless and cause excessive amounts of damage. Others can refuse to pay rent, costing you a lot in court fees. And if a tenant is injured, they may sue the property manager, claiming negligence. No matter how carefully property managers vet their applicants, they are bound to deal with a bad tenant at some point.
Between contracts, rent rolls, incident claims, maintenance, bills, repair requests and more, property managers have a lot of information to juggle day-to-day. This runs the risk of administrator errors, mistakes and oversights, such as an improperly handled claim or a missed deadline.
Market trends can quickly change, affecting the economy and, thus, a property manager’s livelihood. When the economy trends down, people have less money to spend. This increases the likelihood of empty rental properties as people choose to save money, cannot afford to move, and retail businesses have to close.
Property managers have a lot of sensitive information about their tenants on their computers, which puts them at risk of a variety of cybercrimes. Property managers have to store confidential information such as social insurance numbers, credit card numbers and more, making them more of a target for hackers and data breaches.
With the right insurance, you can rest easy no matter what unexpected situation arises. Let Insurance Hero help manage your risk and insurance costs by conducting a full commercial insurance policy review to determine what kind of coverage is best for you!
For reliable, affordable Ontario property manager insurance, please request a quote online or give us a call at 1-855-777-4376. Our team of Insurance Heroes is happy to answer any questions you have!