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. 

All that responsibility also brings risk. When things go wrong – whether due to damage to property, injury to tenants, or financial losses for your clients – having the right property management insurance in place is vital. This insurance is essential for 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. These risks depend on factors such as location, and the types of properties under management. As a result, your start-up property management business is likely to need tailored insurance cover designed to exactly meet those individual needs.

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

1. Public liability insurance

If a third party is injured, falls ill, or suffers property damage while in your offices you could be held responsible. This includes:

• clients; 
• tenants;
• suppliers;
• or members of the public.

Additionally, if you accidentally damage a client’s property while on site, you may find yourself facing legal action. On these occasions, public liability insurance is designed to step in. It helps with legal defence costs and any compensation awarded against you.

2. 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.

3. 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.

4. 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. It helps 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 covers might include:

• cyber insurance; 
• personal accident insurance; 
• and commercial vehicle insurance. 

All of which can be added to your core liability and office insurance covers. This provides 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 review your insurance. This should be done 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 extra 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 you may have added new services in response to challenges such as lockdown restrictions and social distancing.

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? 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. This insurance assist with legal fees and compensation if a third party holds you personally liable for perceived management failings. This applies provided that the claim is related to your business. For example, this insurance can cover the costs associated with defending against trading standards, environmental, or other regulatory claims made against you. It also includes claims by individual shareholders (including other directors). As well as defence costs and awards 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. 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 you 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.