There are some basic questions that property owners and landlords ask us in the course of doing business. One of the first questions that they ask is usually about the additional insured requirement in our management contract. They want to know why they have to name their property manager as an additional insured. Sometimes we get pushback on that, and we think it comes from being uninformed or ill-informed about what that really means.
We have invited Mark Roland, a commercial agent with Foursquare Insurance Agency, to explain what this means and why it’s important.
Additional Insured Applies to General Liability
Additional insured applies only to the general liability part of your insurance policy, not to the entire property coverage. If you’re an investor and you’re worried that this means your property manager will get the check if the house burns down – don’t worry. That’s not going to happen.
Additional Insured Provides Protection for All Parties
Adding your property manager as an additional insured protects all parties. If someone files a lawsuit, everyone who has a dollar to pay is going to be named in that lawsuit. So, if something happens at your rental property and a lawsuit is filed, the property manager and the landlord will likely be sued. Having your property manager covered as an additional insured will provide protection against liability for both of you. It reduces a lot of the coordination that would otherwise be necessary between carriers and policies. You’ll have one set of attorneys instead of two. It prevents things from getting confusing and expensive.
Additional Insured Costs
Are you worried about the cost?
The normal fee for adding an additional insured is nothing. It doesn’t cost anything to include your property manager as an additional insured, and there is no logical reason not to take this step.
Hopefully, you have a better idea about what it means to have an additional insured on your policy. If you have any questions, please contact us at PMI McCaw, and we’d be happy to answer them.