<aside> <img src="/icons/news_yellow.svg" alt="/icons/news_yellow.svg" width="40px" /> An insurance policy on a rental is often called a Rental Dwelling Policy or RDP.
</aside>
Property owners are required to carry insurance on any property we manage per the terms of the property management agreement. Property owners are also required to add our company as “additional insured” to each of their insurance policies. Some get confused between “Additionally Insured” v “Additional Interest”, they may sound similar, however are quite different. Additional Interest does not extend coverage, only notifies the manager when a policy lapses, cancels or has policy changes. Adding your property manager as additionally insured does not give your manager any financial interest in your home, only insurance protection for both the homeowner and property manager.
When you hire a property manager, they almost immediately take over almost all the responsibilities as if they were the property owner. The property manager becomes the Agent of the property owner. If a personal injury occurs for whatever reason, the Property Manager is almost always the first target, in place of the Owner. All reputable property management firms have a strong indemnification and hold harmless clause as part of their contract. When the management company is accurately listed as Additional Insured, the coverage will automatically extend to both parties.
Worst case scenario, if a litigation claim takes place, it is highly likely both the property owner and property manager will be named co-defendants. Having the insurance coverage extends to both parties, creates a unified defense with one insurance company defending both parties. This streamlines the defense, reducing legal expenses which the owner or insurance company is ultimately responsible for.
A great article to read as well
judycook.biz-Additional Insured vs Additional Interest (2).pdf
There is a misunderstanding out there that insurance companies don't want property managers to be added as additional insured. This comes from insurance agents who just focus on personal lines and don't understand landlord insurance.
The insurance companies specializing in landlord insurance will not only put the PM on the policy as an additional insured, but may also give the client a discount for doing so because the risk goes down with professional management. DIY landlords file more claims and they make insurance companies nervous. Some examples of insurance companies that will give clients discounts for putting a PM on as additional insured are Foremost, American Modern, ASI, and NREIG.
Not every insurance carrier allows a property owner to add a property manager as additional insured. Below is a list of carriers that may be helpful if property owners are having trouble getting us added.
Obie is Aloe Property Management’s Preferred Insurance Company. We recommend it to any Owner looking for Rental Dwelling Insurance or if their insurance company won't add property managers additional insured. Single Family, Multifamily, Apartments, and Condos, Obie has the right coverage for your property. If you use the link below Obie will add Aloe Property Management to every policy as additional insured Automatically!
Check out Obie here :
American National uses the additionally insured endorsement SD 9041 0989
State Farm uses the endorsement code: “Option AI” and the declaration page should list the property management company as “Additional Insured-Section II only”. State Farm will name management companies as additional insured on the declaration pages and they will name management companies on condo policies as well as single-family homes and townhouses.