Getting Added as Additionally Insured

If you own a property management company, you know how frustrating it is to get ALL your property owners to add you to their insurance correctly as “Additional Insured”. We finally got this sorted and are at 80% compliance (up from 35%). In this blog post I will explain how we did this, and why it’s so important.

What’s the Difference between Additionally Insured and Additional Interest?

Additional Insured means your company is listed on the policy by name, and will be defended alongside the property owner in the case of any legal action. Additional Interest simply means your company will be notified of any changes to the policy, including cancellation. No coverage is included if you are listed as Additional Interest.

Who Cares About Insurance; Why is This Important?

As a property manager, you are an Agent of the property owner. If a personal injury occurs for whatever reason, you (the property manager) are almost always the first target, in place of the owner. If a legal 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 their insurance company) is ultimately responsible for. Also, our own insurance carrier requires we do this.

How Can I Get Owners To Comply?

This is how we drove compliance with our property owners to 80%:

1. Added a fee for non-compliance to our PMA. The language reads: “OWNER agrees… To obtain and maintain liability insurance on the PROPERTY (rental dwelling policy) to protect the interests of the parties hereto. Policy shall be so written as to protect the BROKER in the same manner and to the same extent they protect the OWNER and will name the BROKER (“RL Property Management Group, Inc”) as additional insured, up to one million dollars per occurrence.” Then in our property owner handbook, we have the following fee listed: “Failure to Provide Evidence of Additionally Insured – Should you fail to provide evidence to our company that you have added us as “additionally insured” to your rental dwelling policy or homeowner’s insurance policy (as required by item B9 in the property management agreement), a fee of $[redacted] per property per month will apply.”

   Property owners must send us a copy of the “dec sheet” (insurance paperwork) showing our company added as additionally insured, and we record the expiration date of each policy in Airtable.

2. Added automated nagging. We track the expiration date for each property’s policy in Airtable (and just leave it blank if we don’t have a policy on file). With some basic scripting within Airtable, we drive logic that automatically emails the property owner a list of their properties that have missing or expired coverage (no email is sent if all properties are up-to-date). It sends another nag email 30 days later, and yet another 30 days after that. Then on a monthly basis, we post charges to each property that is missing coverage (if the owner has already received all 3 nag emails).

3. Made it easy for property owners to switch. We maintain a list of insurance companies that do and do not allow property owners to add us as additional insured. Credit for this list and other information should go to Judy Cook and Heidi Rice- they have both been instrumental in driving a deeper level of understanding and urgency for property management company owners around this topic.

Obie

Obie is RL 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. We have a relationship with Obie where they add our management company to every policy as additional insured automatically! Check out Obie here: Click Here.

Other Options

Century National uses the additionally insured endorsement codes: DL-2410 and DP-0441 - section 2 only coverage L and M.

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.

USAA uses the additionally insured endorsement DP-41 but this code only shows on the homeowner's policy not the declaration page received by the management company.

USAA policies usually show us as covered if we are listed as “Real Estate Manager”.

CSE Insurance Group uses the endorsement code D041ST1

First American P+C: The property manager needs to be listed on the second page of the declarations under Additional Interest/Additional Insured with the words “Addtl Insrd” next to their company name. If the words "Addtl Insrd" are not written then the property manager is only an additional interest.

American Family Insurance: uses the additionally insured endorsement BP 04 02 01 06. Charges $7 for additional insured.

SafeCo: They use endorsement: EL - Extended Liability and charge $25-$30yr.

Allstate: Allstate will not list management companies as additional insured for condo’s/apartments only.  For townhouses and single-family homes, if the owners have a Landlord Package Policy and we are listed as “additional interest”, we are covered.  In the full policy copy the owner receives, the following statement shows we are covered: section 6. “Insured person(s)”  e) any person or organization while acting as your real estate manager for the residence premises.”

I was told by an Allstate agent the company would decide at the point of a lawsuit if they would choose to defend a property management company alongside the property owner.

Erie: it depends on what type of policy they have.  The older Ultrasure policies automatically covered management companies but these policies are being phased out.  A new policy (replacing the Ultrasure) is called the Ultra Pack Plus and is a commercial policy which can name management companies.  Some agencies will list the management companies on the Erie Secure policies and others will not (it seems to depend on their underwriters).

Blacklist

Based on our research the following insurance carriers don’t offer the additionally insured endorsement for property managers: AAA, Geico, Progressive, Allstate, Liberty Mutual.

Farmers agents have told me they do offer the additionally insured endorsement but it only shows on the insurance agents internal files (not on the homeowner or property manager's dec page) so I'm not 100% confident I would be defended correctly if there was a lawsuit.

For companies who only list management companies as additional insured internally, I have found that they will often issue a “certificate of insurance” if requested, that will list the management company for their files.