Quick Takeaways
- Additionally Insured is a required adjustment to your home’s insurance policy to extend liability coverage to your property manager.
- This coverage means your property manager, who is taking on almost all the responsibilities in caring for the home, is jointly defended by your insurance in a liability suit.
- This saves time and money in the event of a lawsuit.
Congrats! You’ve Hired A Property Manager!
By hiring a residential property manager, you're already aware that one of the primary reasons you're doing so is for Risk Mitigation. A true, hands-free, full-service rental firm will step in to mitigate the risks and complexities of owning investment property. Which is true! But another important part of risk mitigation is having proper insurance in place. When you hire a professional management company, you'll probably hear the phrase "Additionally Insured" mentioned as required, in regard to your own Homeowners Insurance policy or Landlord Insurance policy.
So, What Does Additionally Insured Really Mean?
You've more than likely heard the phrase "additionally interested" before. This is because insurance policies allow for different designations on your policy, and it’s important to understand the difference between them:
- Additionally Insured – This means the designated party has shared liability coverage under the insured party’s policy.
- Additionally Interested or Certificate Holder – This means the designated party will receive notifications about cancellations, renewals, or lapses in coverage, but they are not covered under the policy.
A common misconception is that being listed as an Additional Insured gives the property management firm a financial interest in the property. Unlike a mortgage holder, the property management company does not have, or want, a financial interest in the property.
Why Does This Matter?
When a Property Manager is hired, they perform various services on behalf of the Owner. The Property Manager generally has no financial interest in the home as they are not part Owner. However, they take on the risk and liability as if they were homeowners. While we as a firm carry Errors and Omission (E&O) Insurance and General Liability insurance, this only offers protection from claims resulting from the services provided by Rollingwood Management. It does not offer any protection against matters concerning the home itself. So, in essence, the Property Manager assumes all the liabilities of a Homeowner, but their insurance policies do not offer the same type of protection as a Landlord’s insurance policy. This leaves them vulnerable to claims and lawsuits arising from the property itself.
Some examples of when the Property Manager would not be covered by their policy include someone injuring themselves at the property, burglary, fire, mold, water leaks, etc. A typical Landlord insurance policy will protect the Homeowner against claims arising from these examples; however, coverage is not provided to the management company through their E&O Insurance or General Liability Insurance. To solve this problem, we require the Owner to add Rollingwood Management to their insurance policy as Additionally Insured, extending the Landlord’s coverage to the company. Having your policy extended to both parties creates a unified defense, with one insurance company defending both, streamlining the defense process and significantly reducing total legal expenses for all.
Doesn't My Property Manager Have Their Own Insurance?
They do! As a professional property management company, Rollingwood Mangement, Inc. carries multiple different policies to mitigate risk.
- General Liability Insurance
- Workers' Compensation Coverage - Not required in the State of Texas, but covers our employees in case of injury!
- Errors and Omissions Insurance
- And more
These policies don't cover liability arising at your property as the landlord. That responsibility remains with you, as the owner!
At Rollingwood Management, we want to ensure that you receive the best service,
What Insurance Companies Allow For Additionally Insured?
The following is not an exhaustive list and may change over time as companies adjust their offerings. The exact language, codes, and details are not guaranteed to be accurate due to the frequency of changes to company policy. We strongly recommend you contact your insurance agent to discuss this in detail.
- American Family Insurance
- American Modern
- American National - Uses additionally insured endorsement SD 9041 0989
- Century National - Uses the additionally insured endorsement codes: DL-2410 and DP-0441 - section 2 only coverage L and M.
- CSE Insurance Group - Uses endorsement code D041ST1
- SafeCo - Uses endorsement: EL - Extended Liability
- State Farm - Uses the endorsement code: “Option AI” and the declaration page should list the property management company as “Additional Insured-Section II only”. State Farm will name management companies as additional insured on the declaration pages.
- Travelers
- USAA - Uses the additionally insured endorsement DP-41, but this code only shows on the homeowner's policy, not the declaration page received by the management company. USAA policies usually show us as covered if we are listed as “Real Estate Manager”.
If your company says they'll list your residential property manager as Additionally Insured, but only on internal documents, they will often issue a certificate of insurance upon request. This certificate will confirm that your management company has the required coverage for compliance.
What Companies Won't Provide This Coverage?
We've run into the following firms that do not allow this coverage, or any coverage that meets the same requirements.
- AAA
- AllState - It's increasingly rare and difficult to get the proper coverage here. For single-family homes, you sometimes can, if you have a Landlord Package Policy and we are listed as additional interest. This can be confirmed by referencing section 6 and its description of covered insured persons.
- Geico
- Liberty Mutual
- Progressive