Understanding Property Manager Insurance Requirements: A Guide for Homeowners

As a property owner, you might have received a request from your property manager to upload your insurance policy or make specific adjustments to your coverage. You might also be wondering: Why is this necessary? Why does my property manager need to be listed on my insurance policy? And what happens if I don’t meet these requirements?

Property managers rely on tools like PolicyProof to ensure insurance compliance across their portfolios, reduce risk, and protect you as a homeowner. 

In this article, we’ll break down the why behind these requirements, explain key terms like “additional insured” and “Master General Liability Policy,” and outline the simple steps you can take to meet these insurance requirements.

Why Am I Being Asked to Provide My Insurance?

Providing proof of insurance is necessary to protect you and your property manager from financial and legal risks related to property damage, tenant injuries, or other incidents. 

This documentation verifies that your property has adequate coverage, your liability limits meet the Property Management Agreement (PMA) standards, and the property manager is appropriately listed on the policy. Ensuring PMA compliance safeguards all parties involved and helps avoid potential disputes or uncovered liabilities.

Proof of insurance helps your property manager:

• Verify active and adequate coverage - like sufficient liability limits
• Ensure the policy is landlord-specific rather than a standard homeowner’s policy
• Confirm they are listed as an additional insured
• Monitor expiration dates and avoid coverage gaps

Why Does My Property Manager Need to Be Listed as an Additional Insured?

An additional insured is a party—your property manager—explicitly added to your insurance policy. This designation ensures that they are protected under your policy if a liability claim is filed.

For example, if a tenant’s guest is injured—whether from a slip and fall or a dog bite—both you and your property manager could face a lawsuit. Without the additional insured designation, your property manager may be forced to secure liability coverage elsewhere, potentially passing those costs back to you.

Complying with your Property Management Agreement (PMA) and adding your property manager as an additional insured safeguard both parties and helps you avoid unnecessary fees or forced insurance policies.

Why Is Landlord Insurance Required?

A standard homeowner’s policy (HO3 or HO5) does not provide the coverage required for tenant-occupied properties. Property managers require landlord insurance, often called a Dwelling Fire policy.

Key Differences Between Homeowners and Landlord Insurance

Homeowner’s insurance is designed for owner-occupied properties and typically excludes coverage for tenant-related risks. In contrast, landlord insurance is tailored for rental properties and covers:

• Property damage caused by tenants or unforeseen events
• Liability protection if someone is injured on the property
• Loss of rental income due to property damage

If you currently have a homeowner’s policy, it will likely need to be updated or replaced because homeowner’s policies often exclude coverage for tenant-related incidents, leaving both you and your property manager exposed to liability risks. You can either work with your current insurance provider or secure a Dwelling Fire policy through Obie, an insurance company selling policies guaranteed to meet property management requirements.

What Happens If My Current Policy Doesn’t Meet the Requirements?

If your insurance doesn’t meet your PMA standards, your property manager may flag it as non-compliant and set a cure period for you to update your policy. If you don’t provide a compliant policy in time, they may charge a compliance fee or secure interim coverage, adding to your costs. Aligning your policy with PMA requirements upfront avoids these issues and ensures a smoother process.

Getting Compliant: Your Options

1. Work with Your Current Insurance Provider or Agent: Contact your existing insurance provider or agent to ensure you have the right coverage or secure a landlord-specific policy that meets your property manager's requirements. Remember, adding your property manager as an additional insured is essential.
2. Explore Other Insurance Providers: If your current insurance provider doesn’t offer the right policy, you can explore other insurers specializing in landlord insurance.
3. Secure a Policy Through Obie: Obie provides landlord insurance that aligns with PMA requirements and automatically lists property managers as additional insureds. With a quick, hassle-free process, you can secure and bind a policy in just minutes.
4. Opt to Pay Non-Compliance Fees: If you choose not to update your insurance, you can pay the monthly non-compliance fees charged by your property manager to cover their liability risks.

What Is the Master General Liability Policy, and How Does It Affect Me?

If you don’t provide a compliant policy in time, your property manager may activate a Master General Liability (GL) Policy to maintain coverage of their operations. While this protects the property, having your own compliant policy allows you to meet your specific needs, deter fees, and avoid relying on interim coverage.

What Does It Do?

• Provides temporary coverage for bodily injury and property damage claims.
• Protects property managers from financial risk associated with non-compliant insurance.

While this temporary coverage ensures continued protection, property managers may implement non-compliance fees to offset the risks and costs of insufficient insurance.

Key Things to Know About Non-Compliance Fees:

• These fees are determined by your property manager, not Obie.
• They aim to encourage compliance and minimize liability risks.
• They help cover the property manager’s liability while waiting for owners to secure compliant insurance.

Who Is Obie?

Obie is a landlord insurance solutions provider designed to simplify insurance compliance for property managers and owners. Obie helps property managers review and verify insurance coverage efficiently, ensuring requirements are met.

While Obie offers compliant landlord insurance policies tailored to property management agreements, property owners can secure insurance through any provider they feel most comfortable with. The priority is ensuring your insurance aligns with your property manager’s requirements.

Obie’s role is to make the compliance process more manageable, reduce complexity, and provide a reliable option for securing the coverage you need. For more information or to explore tailored insurance solutions, visit obieinsurance.com today.

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