Real estate professionals have plenty to be bullish about in 2016. On the residential side, median home values rose 4.8% from March 2015, according to Zillow.
“A number of factors are driving this growth,” says Zillow. “And many are positive, including strengthening household formation, continued growth in jobs and wages, and general confidence and optimism in the overall value of homeownership, especially among younger generations.”
The commercial side isn’t bad either. CBRE, a major real estate services firm, predicts “moderate economic growth and low interest rates,” as well as a rise in rents across office, industrial and retail properties.
Property managers fulfill a critical role in this ecosystem, keeping investment properties running smoothly, whether those properties are ones they own or ones they manage on behalf of another entity.
No matter your situation, there is one houseguest that can bring the party to a halt: unplanned risk. Damage, theft or injuries to tenants are just a sample of the unique risks property managers face. To guard against them, property managers must be aware of their risk profile and get the right coverage.
The Risks Property Managers Face
From building and equipment damage, to accidents involving tenants and their guests, your coverage and risk management strategy should address all potential areas of exposure. Start by addressing the following with your insurance provider:
- Building, property or equipment damage;
- General liability;
- Injuries sustained by tenants or renters;
- Liabilities from environmental and external events;
- Tenant discrimination; and
- Wrongful eviction.
To insure against these risks, property managers should consider two types of insurance:
- Errors and Omissions Insurance: This type of insurance can help protect against losses that derive from mistakes the property manager makes, which may include “claims made by clients for inadequate work or negligent actions,” says Investopedia.
- General Liability Insurance: Most businesses can benefit from general liability insurance, and property management is no exception. Depending on the provider, this type of insurance will protect against several types of claims, including injuries that happen in the course of your business operations.
These two types of coverage are a good place to start. But you’ll want to sit down with an insurance professional to determine all of the gaps in your coverage. Property managers have different needs based on their duties, the property size and property type.
Questions to Ask Yourself About Property Management Risk
Before property managers schedule an appointment with an insurance professional, they should prepare answers to the following questions:
- What type of properties do I manage?
- What is the property’s approximate value?
- Am I managing a property I own or working on behalf of a property management company?
- What characteristics do my tenants possess? Are they individuals, companies, public organizations, etc.?
Answers to these questions will help your insurance provider (and you) determine the right level of coverage.
Image Credit: PS Property Management Company