In the professional liability space, property managers face unique risks when operating a real estate property for a fee.
To further explore the unique landscape of property manager E&O, we chatted with Brian Alva of
NAS Insurance about the trends impacting property managers and real estate lessors today – and he pointed out the unique scenario property managers are in, in terms of risk.
“Their risk is two-fold,” said Alva. “First, they are performing a professional service on behalf of a property owner. So they have to make sure that a property is rented, maintained and doesn’t deteriorate. If anything happens, it will be a financial loss for the property owner. And then, property managers also have a number of responsibilities to a tenant.”
As Alva explains, property managers are exposed to allegations from both sides – the party that they are providing services for, and the party that they are providing services to.
Among the top claims faced by property managers are tenant discrimination and bodily injury, with the former experiencing an uptick in claims in recent months, says Alva. However, according to Alva, bodily injury is often overlooked when arranging insurance coverage.
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“If a property manager fails to maintain a property, or fixes something quickly and insufficiently, and then someone gets hurt, that’s a big exposure,” he noted. “Property managers need to make sure there is some contingent bodily injury coverage when looking at their E&O.”
In addition, property managers have a high level of cyber exposure when dealing with the sensitive information often obtained and kept when renting out properties.
“One thing that is slightly overlooked on the cyber side of property manager E&O is cyber crime coverage,” Alva said. “What that does is it covers property managers in the event that they wire money to someone incorrectly; and lately, we have seen a lot of phishing schemes, so it’s important for property managers, especially smaller ones, to have coverage for those types of instances.”
To better protect property manager clients, Alva offers brokers and agents a few suggestions to ensure that their clients are adequately covered in this space.
“I would come at it from a well-rounded approach,” he suggested. “We talked before how property managers have exposures on both sides. Being able to educate them on those types of exposures is important. Often, property managers overlook adding coverage that they truly need, so it’s important for agents to make sure they are selling a policy that covers all types of exposures.”
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