Property Management Toolbox
Insurance Questions for Your Provider and Your Property Manager
Published Date: 2016-02-01
For most people, homeowner’s insurance is pretty straightforward. Since they’ll be the ones living in the house, they aren’t overly worried about getting coverage in case of an accident. In general, they just want to be able to pay no more than their deductible if there’s storm damage to the house or if there’s a break-in. For landlords looking for insurance for rentals, especially those with furnished housing, insurance is an entirely different beast.
If you’re signing on with CorporateHousingByOwner to rent furnished housing to corporate tenants, you’re going to have a few questions for both your insurance provider and your property manager. For example, did you know that a lot of property managers now require you to list them on your policy as an additional insured? And did you know that not all insurance companies allow you to do this? These two questions alone will leave you wondering whether you should find a property manager that won’t require you to include them on your insurance policy or an insurance company that will let you include your property manager. Let’s clear some things up to make it easier as you get started in the furnished housing rental world.
Should Your Property Manager Be on Your Insurance Policy?
You might think that your property manager is just trying to save a buck by getting on your insurance policy instead of picking up their own insurance. However, any good property management firm will have insurance of their own, including errors and omissions insurance. This kind of insurance doesn't cover liabilities associated with the property itself, though, and your property manager
is likely just trying to ensure that they are completely covered when it comes to accidents, errors, and problems with the property that could result in a lawsuit.
Ask your property manager about their errors and omissions insurance, as well as any other coverage they have, and you should get a good idea of whether or not you feel comfortable adding them as an additional insured on your policy.
How Much Will You Pay to Add Your Property Manager to Your Policy?
When you look into adding your property manager to your policy, you should ask your provider what this will cost you. Some providers don’t charge extra for an additional insured, but this is rare. In most cases, the additional cost is minimal, and you should have no trouble covering it with your revenue from your furnished housing rental.
If you are unhappy with the additional cost, you may want to either look into another insurance provider or negotiate with your property manager to split the cost of adding them to your policy. You may be able to get a slight discount on your monthly property management fee if you pay to have your property manager as an additional insured.
If your property manager cannot budge on their monthly fee or on paying part of the cost to add them as an additional insured for your rental, shop around to different insurance companies. Some will have no extra cost for an additional insured, but they may have more expensive policies or less coverage. Others will have minimal premiums on coverage but will add on a lot more additional costs. Weigh your options before you commit to any one policy.
Which Coverage Policy Should You Choose?
Corporate Housing By Owner actually offers damage coverage that a lot of landlords love. ARDP
(Accidental Rental Damage Protection) allows you to have your tenants pay for coverage for accidental damages.
At $30, the tenant will be covered for up to $1500 of damage for 30 days. This kind of policy takes a lot of stress off of both you and your tenants when it comes to accidental damage of your property. After all, accidents do happen, but keeping track of deposits for short-term leases can be a huge pain.
ARDP will not necessarily solve your liability insurance issues, but it can make a difference in the policy you choose and whether or not you decide to add your property manager to your insurance for your rental. With CHBO and ARDP, your life should be much easier as a landlord. In fact, some landlords require renters to get ARDP in order to stay in their furnished rentals. Whether you decide to do that or not is up to you, but it could save you both money and anxiety.