What insurance do I need to work in property management?

As a property manager, you are responsible for looking after almost every aspect of a rented property or portfolio of properties on behalf of the owner – from setting rents and finding tenants, to dealing with maintenance issues and managing property finances. Clearly, all that responsibility also brings risk, and when things go wrong – whether damage to property, injury to a tenants or financial losses for your clients – having the right property management insurance in place is vital to avoiding unforeseen costs and protecting your livelihood.

Property management insurance for start-ups

If you are thinking about starting your own property management business, insurance should be a key consideration – the right cover will help you build your business on solid foundations.

However, it is important to recognise that each property management business will face its own set of risks, depending on location, the types of properties under management and a whole range of other factors. As a result, your start-up property management business is likely to require tailored insurance cover designed to exactly meet those individual needs.

That said, the insurance covers most commonly required by property management companies include:

Public liability insurance

If a third party – a client, tenant, supplier or member of the public – is injured, falls ill or suffers property damage while in your offices, or you accidentally damage a client’s property whilst on site, you could be held responsible and find yourself facing legal action. On these occasions, public liability insurance is designed to step in, helping with legal defence costs and any compensation awarded against you.

Professional indemnity insurance

If you offer your clients professional advice on anything from rental rates and financial management to property maintenance, taking out professional indemnity insurance cover is usually an essential precaution. It is there to help cover unforeseen legal and compensation costs if a client alleges that errors or omissions in your professional advice caused them to incur financial losses.

Employers liability insurance

If you employ people in your property management business, taking out employers' liability insurance is a legal requirement. This cover is designed to help with legal fees and compensation in the event an employee is injured, falls ill, or suffers property damage as a result of the work they do for you.

Office insurance

In common with any business operating from an office, a serious incident like fire or flood – or damage to vital equipment – could cause serious disruption. Office insurance is designed to protect against these risks, helping to cover the cost of recovery and getting you back up and running as quickly as possible.

As well as those key covers, it is worth looking at a range of more specialist insurance products for property managers, depending on the risks you face. Those cover might include cyber insurance, personal accident insurance and commercial vehicle insurance – all of which and more can be added to your core liability and office insurance covers, to provide comprehensive protection in a single, easy to manage policy.

Property management insurance and COVID-19

Whether you are in start-up mode or running an established property management business, it is vital to look at your insurance arrangements with the impact of the COVID-19 pandemic in mind.

At the basic level, that means thinking carefully about new or heightened risks facing your business. For instance, it may be that you have been called on to advise on additional health and safety measures to help keep tenants safe during the pandemic – advice that could leave you more exposed to liability claims, or which could worsen the financial consequences of a claim against you. Equally, you may have changed the way your business operates, or added new services in response to challenges such as lockdown restrictions and social distancing.

With this in mind, reviewing your insurance arrangements is crucial. For instance, are your existing policies sufficient to protect you against new or heightened risks created by changes in the way you work, and are any new services you offer covered?

Then think about new covers you might need. If you have taken on more management responsibilities, it may be worth considering director’s and officers’ insurance, which will step in to help with legal fees and compensation in the event a third party holds you personally liable for perceived management failings providing that the claim is in relation to your business. For example, the costs associated with defending trading standards, environmental or other regulatory claims against you; claims by individual shareholders (including other directors); defence costs and awards of claims arising from your personal involvement with the administration of any company pension. Similarly, a greater reliance on remote working may leave any client or tenant personal data you hold at greater risk from hackers, and cyber insurance could help you mitigate this risk.

If in doubt, seek expert help

If you are in any doubt about your property management insurance arrangements, or want help to review your cover in light of changes to your business, leave nothing to chance. Speak to a specialist broker with the knowledge required to help you assess the risks you face and find the right property management for you.