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What insurance should your property manager have?
Commercial property owners usually prioritise comprehensive insurance coverage for their assets — and many think that insurance is enough.
But this misconception can be a costly mistake.
Property managers also require insurance. In fact, they need a range of coverages to safeguard against potential risks and ensure their operations keep running securely.
When choosing a commercial property manager, here are the insurance protections you need to check they have in place and why:
Professional indemnity insurance
Professional indemnity insurance is like a trusty shield for commercial property managers, providing protection against claims of negligence or breaches in professional duty.
Essentially, this coverage protects the property manager in the event of legal action as a result of alleged errors or faulty services provided while managing a property.
Say, for example, the property manager forgets to renew an inspection certificate for the lifts in a commercial complex, a tenant's customer is then injured and the tenant holds the property manager responsible. Professional indemnity insurance pays any legal fees and, if the property manager is found liable, any settlement costs or awarded damages.
In a nutshell, this protection helps safeguard the manager’s financial stability and reputation, allowing them to work with confidence. It also assures property owners that their assets are protected and managed with a high degree of professionalism and accountability.
Public liability insurance
Public liability insurance in real estate is a must-have. It covers any claims made against property managers by third parties for injuries or damages that occur on the property they manage, saving them from potentially huge out-of-pocket expenses.
Imagine someone tripping over carpet and becoming injured during a property inspection. They may hold the property manager responsible for their medical bills.
Public liability insurance covers any legal costs and compensation claims that may arise. This not only protects the manager's financial health but also the trust and safety of tenants and visitors.
This coverage also helps uphold the property's reputation and ensures everything keeps running smoothly, no matter what unexpected events occur.
Management liability insurance
Management liability insurance guards against financial and reputational risks, covering claims of mismanagement, like breaches of fiduciary duty or wrongful acts by directors and officers.
It's like a comprehensive safety net that protects the property manager's personal and business assets.
For example, if a former employee claims wrongful termination and takes legal action against the property management company and its officers, management liability insurance covers any legal defense costs and any potential settlements or judgments. This means the company can dodge significant financial and reputational strain while minimising any impact on business operations.
Cyber insurance
Property managers handle sensitive information such as tenant details, financial transactions and building security codes — all increasingly vulnerable to cyber attacks.
Cyber Insurance for property managers covers the costs of data recovery, legal fees, and even compensation for affected parties. This not only shields the property manager from financial loss but also ensures quick recovery and minimal disruption.
Meanwhile, property owners can be assured that their personal and business information — and that of their tenants — is protected and that any cyber threats will be managed swiftly.
Why an uninsured manager is risky?
The risks of uninsured property managers are immense; using one is a gamble that exposes both managers and property owners to major financial and legal risks.
For property owners, partnering with an uninsured manager means walking a tightrope without a net. It hints at a lack of professionalism and preparedness on the manager's part, which could lead to serious consequences.
Without insurance, there's a higher chance of unexpected incidents, legal battles, and costly claims, leaving property managers facing lengthy disputes and potentially even bankruptcy.
For landlords, this situation doesn't just affect your tenants — it can also hit your property's profitability, reputation and long-term value hard.
Why self-managing your own insurance is risky?
When property owners decide to self-manage their insurance, they take on significant risks that can jeopardise their financial stability and asset protection.
Without the expertise and comprehensive coverage that a professional property manager provides, owners risk financial losses from cyber threats, costly injury claims, and substantial repair expenses following disasters.
The complexity of insurance compliance and tenant-related issues can further strain their resources, leading to potential legal penalties.
Choosing security
A property manager like Aegis that's equipped with a portfolio of comprehensive insurance policies demonstrates their commitment to best practice, minimising legal risks and financial exposure for clients, and the ongoing success of their business operations.
This should give landlords confidence that their asset is being managed with the highest level of care and responsibility.
These protections also help to foster a reliable, secure partnership that benefits both property managers, landlords and their tenants alike.
And for property owners, knowing that their asset is in safe hands enables them to focus on their investment's long-term growth.
