Our job is to help minimize the risks of owning investment property in Nevada County and Placer County California, including having all necessary protection from your homeowner insurance policy.
In addition to proper coverage amounts, it’s also essential that your property management company be listed as an Additional Insured on your homeowner policy.
What does “Additional Insured” mean on a Homeowner’s Insurance Policy?
As the owner of the property, you are the “Named Insured,” and are the only one that receives the full benefit and all protections available in the policy. Because the property manager acts as your agent, naming them as Additional Insured extends property liability coverage to them as well.
Additional Insured is NOT the same as Additional Interest
Many people, even insurance agents, get confused and think that Additional Insured and Additional Interest are the same thing. They are not.
Naming your property management company as “Additional Insured” extends property liability to the named as well. “Additional Interest “does not extend any coverage at all! It simply means we receive a copy of your insurance policy and are notified if you cancel or fail to renew your policy.
Why is it important to add my property manager as Additional Insured?
One of the great things about a professional property management company is that we take care of all tenant communication for you. But if the tenant or their guest(s) get injured on the property, we are almost always included, alongside you, in any resulting lawsuit.
That’s why property management agreements include a clause stating that the Rental Property Owner shall: "Indemnify, defend and hold harmless Property Manager, and all persons in Property Manager's firm, as permitted by law...from all costs, expenses, suits, claims, liabilities, damages, judgments, attorney fees, and claims of every type..."
Listing the property manager as “Additional Insured” on your policy extends the liability and legal defense costs to include the property manager as well, in addition to you as the “Named Insured.”
Simply put, you want your insurance company to cover your property management company. Here’s why:
What if I my property manager is NOT listed as Additional Insured on the property insurance policy?
For example, say your tenant decided to draw a bath in the upstairs bathroom. They go downstairs and forget about the bath alltogeher and begin doing other tasks outside. Two hours later they come back inside into the kitchen and slip, fall, and break their back. The bath tub water had leaked from upstairs to the bottom floor causing flooding. Even if it was their own fault, the may choose to sue you, and us, for several hundred thousand or million dollars!
Imagine having an agreement requiring you to “indemnify, defend, and hold harmless..” the property management company, but your property liability coverage protects you but not your property manager.
Without being named as the Additional Insured on the homeowner's policy, the property manager could end up seeking reimbursement for all costs from the owner, either through their insurance or directly, for all related losses. It makes the process much more painful, takes more time to resolve, and is significantly more expensive for everyone involved.
Nobody wants that.
How do I add my property manager as an Additional Insured on my property insurance policy?
In theory, it should be as simple as contacting your insurance company or agent to make the request. In real life, it's not that simple. Sometimes they get confused, or think you’re confused, and incorrectly add us as Additional Interest instead (which is not the same at all, as mentioned above). Other times, they just won’t do it at all.
To make the process as efficient as possible for you, we’ve developed a specific form to provide to your insurance company, making the formal request in writing. We’ve found this avoids confusion and misunderstanding. And you can always have them contact us directly.
What should I do?
- Have your current insurance company add us as Additional Insured: Download and complete this form and send it to your insurance company. We’ve found it helps avoid confusion and misunderstanding. Hopefully they’ll add us. If so, great. If not, you can also..
- Change to an insurance company who will add us: We cannot promise that another company will take your property on, or add us, but sometimes it pays to shop around. If you’d rather keep your existing insurance company but they won’t add us as “Additional Insured” on your policy or you cannot get the minimum coverage of $1M, we have one other available option for you..
- We’ll handle it for you: Do nothing and let us take care of it for you! If after 15 days from onboarding your property we have not received evidence of insurance naming us as Additional Insured with $1M minimum liability coverage, we will automatically add you to our Master General Liability insurance policy that provides $1 million of liability coverage at a cost of $25/property/mo. (NOTE: This policy adds residential liability coverage only and would be in addition to your existing policy. It does not replace it or provide coverage for commercial properties.)
What insurance companies are willing to include property manager as Additional Insured?
Insurance companies that WILL NOT add property manager as Additional Insured
- AAA
Insurance companies that WILL add property manager as Additional Insured
- American Family Insurance
- American National
- Century National
- CSE Insurance Group
- Progressive
- Safeco
- State Farm
- Travelers Insurance
- USAA
- Travelers Insurance
