E&O INSURANCE
WHY DO PROPERTY
MANAGERS
NEED ERRORS
& OMISSIONS
INSURANCE?
Property managers wear many
different hats in the course
of their jobs. In addition to
overseeing the maintenance,
security, and the overall welfare
of the properties they manage, at times
they may also function as leasing agents,
real estate agents, appraisers, consultants,
or construction managers. To do so, they
must be knowledgeable and up to date
on zoning regulations, tenant laws, tax
information, and property values. In
addition, they are responsible for making
sure lease agreements, purchase and
sale agreements, and work orders are
complete, accurate, and submitted to the
proper authorities when necessary.
Due to the wide array of duties and
responsibilities they have and the tight
deadlines they operate under, even the
most thorough and meticulous property
managers inevitably make errors.
Whether it’s an error of commission,
such as entering the wrong information
into a purchase agreement, or an error
of omission, such as failing to disclose
known pollutants, the result is often the
same—a lawsuit.
Without the right type of insurance,
the cost of defending a lawsuit can be
financially devastating for a property
management company. Property
managers often mistakenly believe their
Commercial General Liability (CGL)
policies will protect them from lawsuits
stemming from a negligent act, error,
or omission, but a typical CGL policy
only covers bodily injury, property
damage, personal injury, and advertising
injury claims. To protect themselves
from claims—such as negligence,
misrepresentation, inaccurate advice, and
violation of good faith and fair dealing—
property managers must instead turn
to property management professional
liability insurance.
WHAT IS PROPERTY MANAGEMENT
PROFESSIONAL LIABILITY INSURANCE?
Property management professional
liability insurance, also known as
Errors & Omissions (E&O) insurance,
is supplementary liability insurance
designed to safeguard a business against a
catastrophic loss in the event of a lawsuit
due to a negligent act, error, or omission
by the property manager or someone in
his or her employ. The policy covers the
sizable legal defense costs incurred during
the course of a lawsuit as well as the final
judgment if the business owner does not
win the lawsuit. In addition to claims of
error, omission, or negligence, this type of
coverage can also be designed to protect
against slander, libel, and breach of
contract. Policies typically do not provide
coverage for nonfinancial losses or for
intentional or dishonest acts.
Property management professional
liability insurance policies generally have
both a claim limit and an annual limit
that is based on the insured’s exposure.
The claim limit is the maximum amount
that will be paid for any single event,
and the annual limit is the maximum
that will be paid in any one year. Typical
limits range from $250,000/$500,000
to $2,000,000/$4,000,000 and differ
depending on the individual business.
Because there isn’t a standard policy, an
experienced agent who understands your
needs is invaluable. +
BY: RYAN HAGER, CLCS
ASSISTANT VICE PRESIDENT,
JGS INSURANCE
Ryan Hager is the third generation to enter into the family owned and operated JGS Insurance.
At JGS Ryan has worked with both family owned businesses and large corporations to provide
them with Captive Based Solutions. Ryan specializes in providing proactive services to his
clients to reduce their losses and premiums in order to gain control of their insurance destiny.
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