Property management insurance basics

A property management company carries two kinds of risk, and they are easy to blur together. One is the homes. Those belong to your owners, and their policies cover the buildings. The other is your business: the people you send into those homes, the leases you sign, the rent you collect, the mistakes an owner could blame on you. The owner’s policy was never written to cover that second kind.

That’s the whole job of property management insurance. It protects the firm, not the doors.

What insurance does a property management company need?

Most firms end up with some version of the same core set. Which pieces you need, and at what limits, depends on how many doors you manage, whether you run long-term or short-term rentals, how many employees you have, and what your management agreements promise.

• General liability: covers injuries and property damage tied to your operations, including at the homes you manage. This is often called off-premises liability, because the claim happens at a property you don’t own.
• Professional liability (errors and omissions): covers claims that your professional work caused a financial loss: a lease drafted wrong, a missed renewal, rent not collected, a vendor not vetted. General liability generally does not respond to these.
• Workers’ compensation: in Florida, most non-construction employers with four or more employees, full or part time, must carry it. Construction businesses must cover every employee. If your firm does its own maintenance or repair work, ask how that work is classified.
• Hired and non-owned auto (HNOA): covers your company’s liability when an employee drives a personal or rented car for business, like a run to the bank or a showing across town. It typically does not pay to fix the employee’s car. If the company owns vehicles, those need a commercial auto policy.
• Umbrella or excess liability: adds a layer above your general liability and auto limits.

Do I need general liability, E&O, or both?

For most property management firms, both. They answer different questions.

General liability answers “someone got hurt, or something got damaged, and they say it was our fault.” A guest slips on a pool deck your crew just cleaned. A maintenance tech cracks a countertop.

E&O answers “we trusted you to do something and it cost us money.” An owner says you placed a tenant who never paid and should have been screened out. A lease clause you drafted didn’t hold up.

If your agreements have you handling leases, screening, rent, or owner funds, the E&O exposure is real even if nobody ever gets hurt.

What coverage limitations should a property manager look for?

Two show up often and get missed often.

Assault and battery: many general liability policies exclude or sharply limit it. If your staff deal with tenants, guests, and evictions, find out which one you have before a claim does it for you.

Defense costs inside or outside the limit: some policies pay legal defense on top of the liability limit. Others pay it out of the limit, so every dollar spent on lawyers is a dollar less available for a settlement. Two policies with the same $1 million limit can behave very differently in a long lawsuit.

Why do I need insurance if the home is already insured?

Because the owner’s policy protects the owner. Some owner policies extend liability to the owner’s property manager; many don’t, and even when they do, that protection is shaped by someone else’s policy and someone else’s limits. Your own general liability covers your operations at every home you manage, whatever each owner happens to carry.

Many managers also ask owners to list the firm as an additional insured on the owner’s liability coverage. It’s a reasonable ask to build into your management agreement.

What insurance should my contractors and vendors carry?

Your vendors should carry their own commercial general liability, commonly at $1 million per occurrence, and name your firm as an additional insured. Collect a certificate of insurance from each one and refresh it every year. When a vendor’s uninsured mistake becomes a claim, it tends to land on whoever hired them.

Additional interest: copies, not control

Owners can list your management company as an additional interest on their property policy. That means the carrier sends you copies of renewal notices, cancellation notices, and in many cases claim correspondence. It does not let you change the policy.

It matters most after a storm. You can report a claim for an owner, but some carriers will only send claim correspondence to a manager who is listed as an additional interest, and some want the owner to authorize the contact directly. Claim payments go to the property owner. If your owners live three states away, settle ahead of time how contractors get paid.

Insuring the homes you manage: portfolio-level help

The firm’s own coverage is one side. The other is the homes themselves, and that’s where most managers spend their insurance time: chasing renewal dates across a dozen agencies, finding out a policy lapsed after the fact, fielding an owner’s non-renewal letter in the middle of hurricane season.

We work with property managers, investors, and developers on exactly that.

• Property managers: we can quote the homes you manage for your owners, and owners can list you as an additional interest so renewal and cancellation notices reach you too.
• Investors: we write investor portfolios from 2 homes to more than 200, including homes owned through LLCs, and we know how lender insurance requirements tend to read.
• Developers: we can provide sample quotes during the sales cycle so buyers know what insurance will cost before closing, not the week of.

Property management insurance FAQ

Is property management insurance required in Florida?

Workers’ compensation is required once you hit the employee thresholds above. General liability and E&O generally are not required by the state, but management agreements, owners, associations, and lenders often require them.

Does property management insurance cover short-term rentals?

It can, but tell the carrier. A firm that manages vacation rentals has guest turnover, cleaning crews, and booking operations that a long-term-only firm doesn’t, and the policy should be written for the operations you run.

Why is property management insurance so expensive right now?

Florida has been in a hard insurance market, where losses and reinsurance costs pushed rates up across nearly every line, commercial included. The way to push back is to shop the account across carriers and to make sure you’re rated for the business you run today, not the one you ran five years ago.

Why use Fudge for property management insurance?

Fudge Insurance is an independent agency, so we shop your business across multiple carriers instead of selling one company’s product. Our commercial team works with property managers on both sides of the job: the firm’s own coverage and the portfolio of homes it manages.

When was the last time someone looked at your firm’s coverage against your current management agreements? Ask us for a review.

Request a quote today!

We would be happy to quote your property management insurance needs.