A property management company is sued for the condition of buildings it does not own, with money it does not own, by people it did not hire. That sentence is the whole underwriting problem. The owner carries the property and the liability on the building; the manager carries the professional exposure for how the building was managed, the fiduciary exposure for rent and reserve money moving through its trust accounts, and the employment exposure for on-site staff it technically employs. A general liability policy bought off a small-business checklist covers the office and almost none of that.
The management classification is broader than most people assume. It covers third-party fee managers of apartment and multifamily property, commercial office, retail and industrial managers, community association and HOA or condo managers, single-family and small-portfolio residential managers, mixed-use operators, and the management arm of a brokerage or development firm written as a separate entity. It also quietly covers firms that call themselves something else: an asset manager that handles leasing and maintenance, a construction company that manages the buildings it built, or a family office with an in-house team running its own rental portfolio under a management agreement.
What they share is a structure insurers treat as unusual: the revenue is a management fee, often only four to ten percent of the rent roll, while the exposure is measured by the value and occupancy of the entire portfolio. A firm with $900,000 of fee income may be the named defendant on buildings worth $150 million. Premium scales with fee income; liability scales with the portfolio. That gap is why this class gets underinsured.
Before anything is quoted, the management agreement decides how much of the risk you have already agreed to absorb. Four clauses do most of the damage. First, the indemnity: a mutual indemnity running only to each party's own negligence is normal; a one-way indemnity in which you hold the owner harmless for conditions of a building you do not control is not, and it converts an owner's premises claim into your claim. Second, insurance requirements: the agreement usually states limits you must carry and that you must be named as additional insured on the owner's property and liability policies. Confirm the certificate actually exists for every property, every year, and that the status is not quietly dropped at the owner's renewal. Third, who procures coverage: if the agreement makes you responsible for placing or maintaining the owner's insurance, a lapse becomes a failure-to-procure E&O claim with the full building loss attached. Fourth, standard of care: language promising to manage "in accordance with best practices" or to "ensure" compliance sets a bar higher than negligence and can outrun what an E&O policy agrees to defend.
For the mechanics of keeping those certificates current across a portfolio and across every vendor you hire, see certificate tracking and vendor compliance, and for how indemnity language shifts risk between parties, contractual risk transfer.
1. Additional insured status that does not reach completed claims. You are named on the owner's policy, the owner sells the building or changes carriers, and a slip-and-fall from eighteen months ago is tendered to a policy you are no longer on. Track owner policy changes the way you track lease expirations.
2. Care, custody or control. Property of others in your care is excluded on most liability forms. Keys, vacant units, owner-supplied equipment, tenant belongings in storage and property during a renovation all fall into that gap and need a bailee or inland marine solution.
3. Habitability and condition claims. Mold, moisture, lead paint, bedbugs, inadequate lighting, and assault-and-battery allegations following a crime on the premises all name the manager alongside the owner. On habitational programs, assault and battery is routinely sublimited well below the policy limit, and mold is often excluded outright — read the owner's policy, not just yours. The owner-side version of this exposure is covered in apartment and habitational property insurance.
4. Money. Trust-account defalcation by a bookkeeper and wire fraud on a security-deposit refund or an owner distribution are different perils with different insuring agreements. See crime and employee dishonesty and social engineering and wire transfer fraud.
In a coastal portfolio, the manager is the one who files the claim, hires the mitigation vendor and fields the owner's question about why the deductible is a percentage rather than a dollar amount. Two exposures follow from that. The first is the named-storm deductible itself: the owner's percentage deductible on a $20 million building can run into six figures before anything is payable, and an owner who was never told that in writing tends to look for someone to blame. See named storm deductibles. The second is post-storm vendor selection: hiring an unlicensed or uninsured remediation contractor on the owner's behalf, in a hurry, with no certificate on file, is a textbook E&O claim with a construction-defect loss behind it.
There is no single number, and anyone quoting one without the door count is guessing. What is stable is the rating basis. Property managers E&O is priced off units or doors under management and gross fee income, with commercial square footage counted separately; general liability and umbrella are priced off fee income and payroll; workers compensation off the maintenance-versus-clerical payroll split; and crime off the maximum balance that sits in the trust accounts, which is usually higher than the owner's estimate once a monthly rent cycle is accounted for. Expect E&O underwriters to ask for the unit count by property type, the number of owners under contract, how long the firm has managed, a sample management agreement, the tenant screening criteria in writing, the trust account reconciliation procedure and who performs it, and five years of claims. Portfolios with any of these draw more scrutiny and more premium: subsidized or voucher housing, student housing, short-term rentals, properties in receivership, construction or major renovation in progress, and any portfolio where the firm also has an ownership interest.
We are an independent agency in Statesboro working commercial accounts across Georgia and the Southeast, and this is a class where the review is diagnostic rather than a rate exercise: whether the E&O form matches the services in your management agreements, whether your additional insured status is real and current across every owner, whether the money in your trust account is insured as clients' property, and whether the umbrella is sized against the portfolio instead of the fee income. More on how we work: Statesboro and Savannah. Related reading: professional liability and E&O, employment practices liability, and hired and non-owned auto.
Send your general liability, E&O, crime and workers compensation declarations with the full endorsement pages, one representative management agreement, and your current door count by property type. We will tell you which of the four management exposures — professional, money, employment and additional insured status — your program actually answers.
Get a free coverage reviewAt minimum: general liability for your own premises and operations, real estate property managers errors and omissions for the management services themselves, employment practices liability with a third-party extension for tenant and applicant discrimination claims, commercial crime endorsed to cover clients' property and social engineering, hired and non-owned auto for staff driving personal vehicles between properties, workers compensation split correctly between maintenance and clerical payroll, cyber liability for tenant and applicant data, and an umbrella sized against the portfolio you manage rather than against your fee income. Firms managing community associations should also look at directors and officers coverage, since board decisions they advise on can be challenged. Georgia does not mandate a specific insurance package for managers, but management agreements and lender requirements routinely do.
Often not in the way managers expect. A general liability policy responds to bodily injury and property damage caused by an occurrence, and it will typically defend a slip-and-fall where you are a proper defendant. But most of what gets alleged against a manager is a professional failure: failure to inspect, failure to maintain, failure to respond to a repair request, failure to screen a tenant, failure to procure insurance the owner asked for. Those are economic and professional allegations, and many CGL forms carry a real estate or professional services exclusion that removes them. That is the specific gap real estate property managers errors and omissions is written to fill, which is why the two policies are sold together rather than as alternatives.
Yes, and almost every management agreement already requires it. The point is that a claim arising from the condition of the building should be defended by the policy insuring that building, not by yours. Three things go wrong in practice. The certificate is issued once at the start of the relationship and never refreshed at the owner's renewal. The owner changes carriers or sells the building and your status quietly disappears. Or the endorsement grants status only for ongoing operations, so a claim reported after your management of that property ended is tendered to nothing. Track additional insured status on a schedule with the owner's policy expiration dates, and request the endorsement itself rather than relying on a certificate, which is evidence of nothing by itself.
Not automatically. A standard commercial crime policy's employee theft insuring agreement covers loss of money and securities owned by the insured, and rent, security deposits and owner reserves in a trust account are not owned by you. Covering them requires the clients' property or property of others extension. Separately, employee theft and social engineering are different perils: theft by a bookkeeper over several months is a fidelity loss, while an employee tricked by a fraudulent email into wiring an owner distribution to a criminal account is a social engineering loss and needs its own insuring agreement with its own, usually much lower, sublimit. Set the limit against the maximum balance in the accounts during a monthly rent cycle, not the average balance.
Primarily on the size and mix of what you manage and on gross fee income, not on the value of the buildings. Underwriters ask for the number of residential units or doors under management, commercial square footage, the number of separate ownership clients, how long the firm has been in business, and the services performed beyond collection and maintenance, since construction management, brokerage, appraisal and property tax appeal each add exposure. Risk management detail moves the price: written tenant screening criteria applied consistently, documented inspection intervals, a trust account reconciled monthly by someone who does not have signature authority, and a current sample management agreement that does not promise a standard of care above negligence. Subsidized housing, student housing, short-term rentals and properties under renovation attract additional scrutiny.
Only with third-party employment practices liability coverage, and sometimes only in part. Standard EPLI responds to claims by employees and applicants for employment. A fair housing complaint by a rental applicant, a familial-status allegation about an occupancy policy, a reasonable-accommodation or service-animal dispute, or a discrimination claim about how an application was screened are all brought by third parties, and the base form will not reach them. Ask for the third-party extension explicitly and check how the policy treats claims arising from an administrative charge or a testing organization, since many complaints in this class begin as agency proceedings rather than lawsuits. Also check the defense provisions, because these claims are usually defense-cost events rather than large settlements.
If those workers are your employees, yes. Georgia generally requires workers compensation once a business regularly employs three or more people, counting part-time workers, and neighboring Southeast states use different thresholds, so confirm the rule in each state where you have staff. The complication specific to this class is classification rather than eligibility: maintenance, groundskeeping and janitorial payroll is rated at a far higher rate than leasing and clerical payroll, and if the policy is written with everything in one classification you will meet the difference at audit. Keep payroll records that support the split by employee and by duty. Also settle in writing whether on-site staff at a managed property are your employees or the owner's, because the certificate and the audit will both turn on that answer.
For general information only. Not legal advice and not a quote or contract of insurance. Policy forms, endorsements, sublimits and exclusions vary by carrier and form edition — real estate and professional services exclusions on general liability forms, property managers errors and omissions coverage grants including failure to procure insurance, wrongful eviction, tenant screening and security deposit allegations, employment practices liability forms and third-party coverage extensions, commercial crime employee theft, clients' property and social engineering insuring agreements and their separate sublimits, care, custody or control exclusions and bailee forms, additional insured endorsements and whether they extend to completed operations, waiver of subrogation endorsements, assault and battery sublimits, mold, bedbug, lead paint and habitability exclusions, named storm and percentage wind deductibles and their application, hired and non-owned auto endorsements, cyber and tenant data provisions, and umbrella attachment points must all be read as actually issued. Management agreement indemnity, standard of care, insurance procurement and trust account obligations, landlord-tenant and eviction procedure, fair housing and accommodation duties, security deposit handling and real estate licensing requirements are governed by federal, state and local law and by qualified counsel, not by this page. Workers compensation coverage thresholds, classification, officer inclusion and exclusion and premium audit procedure are set by the applicable rating bureau and state authority and are amended over time — confirm your obligations with the relevant agency and qualified counsel. Coverage subject to policy terms, conditions, exclusions and carrier appetite.