Top Line: One practical way Baltimore landlords can better protect their rental investments is by listing their property manager as an additional insured on their insurance policy.
Owning rental property comes with risk, even when everything seems to be running smoothly. From tenant injuries to property-related claims, unexpected issues can arise at any time. For Baltimore property owners, working with a professional management company like PMI Bmore Metro helps reduce operational stress—but insurance coverage plays an equally important role in protecting your investment.
One often-overlooked insurance strategy is adding your property manager as an additional insured on your liability policy. This simple step can help strengthen coverage and reduce potential conflicts if a claim occurs.
What Does “Additional Insured” Mean?
An additional insured is a party added to an insurance policy who receives certain liability protections under that policy. When a property manager is listed as an additional insured, they are covered for claims related to their management of the property, such as injuries, accidents, or property damage connected to day-to-day operations.
It’s important to note that this is different from being listed as an “additional interest.” An additional interest may receive notifications about policy changes, but it does not provide liability protection. Being named as an additional insured offers broader coverage and protection.
Why List Your Property Manager as an Additional Insured?
Professional property management companies typically require being listed as an additional insured, and this provision is often included as a standard term in management agreements. If a property manager does not request this coverage, it may be worth asking questions, as it can indicate gaps in their risk management practices.
Adding this endorsement is important for several reasons:
Minimizes legal disputes: Following widely accepted industry practices helps reduce the likelihood of disagreements between property owners and managers when claims arise.
Simplifies the claims process: When both the owner and property manager are covered under the same policy, insurance carriers can coordinate defense and claims handling more efficiently—particularly if both parties are named in a legal action.
Provides protection for property-related risks: Coverage can extend to common premises-related incidents, such as tenant injuries, accidents, or damage occurring at the property.
Offers added protection for owners: Many property management agreements include indemnification provisions. Without an additional insured endorsement, property owners may be exposed to personal liability or unexpected legal expenses if an incident occurs.
Isn’t My Property Manager Already Covered by Their Insurance?
At PMI Bmore Metro, we often hear property owners ask if their property manager’s insurance is enough. While property managers typically carry General Liability and Errors & Omissions (E&O) insurance, these policies usually don’t cover issues directly tied to the properties they manage.
For example, if a tenant in a Baltimore property files a claim due to an injury caused by a hazard on your property, your insurance policy is usually the primary coverage. That’s why it’s important to add your property manager as an Additional Insured on your policy to ensure comprehensive protection.
Why Adding Your Property Manager as Additional Insured Matters
Property managers take on significant responsibilities, from handling tenants and maintenance requests to responding to unexpected incidents. With that responsibility comes exposure to potential liability, including:
Property Damage: Incidents such as fire, flooding, or theft.
Personal Injury: Tenant or guest injuries occurring on the property.
Other Claims: Any situation that could lead to legal action or financial loss.
By adding your property manager as an Additional Insured, you gain several key benefits:
Unified Legal Defense
Both the owner and manager share the same insurance provider, reducing legal complications and costs from separate defense strategies.Enhanced Premises Liability Protection
Extending your policy’s coverage helps clarify liability for damages, reducing the risk of costly out-of-pocket legal expenses. (For more on liability coverage nuances, see Investopedia.)Cost Savings
Without this endorsement, a property manager may later seek reimbursement from the owner under the indemnification clause—potentially resulting in expensive and time-consuming claims.
Will my Insurance Add My Property Manager as Additional Insured?
TOP LINE: PMI Bmore Metro doesn't want the additional insured endorsement to be a hardship. For any of our clients struggling with this, we have a master liability policy that provides our clients with up to $1,000,000 in coverage per occurrence, for only about $19.99 per month per unit. Please note our master policy only covers liability; owners are advised to obtain a separate dwelling/fire policy to cover the dwelling structure.
Most major insurance companies recognize the benefits of adding property managers as Additional Insured and typically do so at no extra cost. However, some smaller or specialized insurers may incorrectly perceive this as an increased risk or be reluctant to add a third party. Given that a professional management company helps reduce overall risk—and that the owner indemnifies the manager—it makes little financial sense, even for the insurance company, not to secure this endorsement.
While PMI Bmore Metro has not (yet) encountered an insurance provider refusing to add us as Additional Insured, some colleagues have faced challenges, often due to inexperienced insurance agents. These agents may mistakenly believe that the Additional Insured requirement applies to the entire dwelling policy, implying that the property manager has an ownership interest in the property (which is obviously not the case). Because of this misunderstanding, some property owners also hesitate to request the endorsement.
It’s helpful to clarify to hesitant insurance agents that the property manager only needs to be listed as "Additional Insured" for Liability Coverage, not for the structure itself. In most cases, once this is explained, the insurance agent understands and adds the property manager to the policy. Another alternative is to request an endorsement that states: "Liability Coverage Extended to PMI Bmore Metro," which is also sufficient. Some owners have had success escalating the request to a supervisor.
If your insurance provider continues to be resistant to this requirement, it may be a good idea to explore other options with your insurance agent. This is especially true if your policy does not separate liability and dwelling coverage. In such cases, switching to a different insurance provider may be necessary.
How to Add a Property Manager as an Additional Insured
Follow these steps to make sure your property manager is properly covered under your policy:
Review Your Policy
Check that your current insurance coverage allows for an Additional Insured endorsement. For guidance, you can refer to helpful resources like Zillow’s landlord insurance guide.Contact Your Insurance Provider
Request the Additional Insured endorsement and ask whether there are any associated costs.Provide Required Information
Give your insurer your property manager’s business name, address, and role in managing your property.Obtain Written Confirmation
Once your property manager is added, request a copy of the endorsement and share it with them for their records.
Should the Property Manager Add the Owner as Additional Insured?
While it is technically possible for a property manager to add the owner as an Additional Insured on their policy, this is not standard practice and can create several potential issues:
It doesn’t make sense: The property manager works for the owner—not the other way around.
Duplication of coverage: The owner should already have a liability policy, so adding the property to the manager’s policy would create unnecessary overlap.
Complicated claims handling: Policies covering parties that don’t own the property can make the claims process more complex and lead to delays.
Risk of subrogation: If a claim is paid under the manager’s policy that should have been covered by the owner’s policy, the insurer may later seek recovery from the property manager.
Higher costs for the owner: The added exposures above can increase insurance premiums, which the owner may ultimately be responsible for.
Given these factors, it is generally safer and more effective for the owner to maintain their own coverage tailored to protect their specific interests.
Helpful Tips for an Effective Insurance Setup
Be Clear in Your Request: Specify that you need an Additional Insured endorsement, not just an Additional Interest notification.
Shop Around: If your current insurer charges extra fees, compare policies to ensure you’re getting the best overall value.
Ask About Master Liability Policies: Some property managers, including PMI Bmore Metro, offer a Master Liability Policy for owners—a cost-effective way to extend coverage.
The Importance of Proactive Risk Management
Failing to add your property manager as an Additional Insured can leave your Baltimore property vulnerable to lawsuits, claims, and disputes, all of which can negatively impact profitability. Proactive risk management through proper insurance coverage is essential for long-term success. For more insights on effective landlord risk management, see resources like BiggerPockets’ landlord insurance guide.
Final Thoughts
Adding your property manager as an Additional Insured is a small but crucial step in protecting your investment and strengthening your professional relationship. This practice:
Aligns with industry standards
Minimizes legal and financial risks
Promotes smoother day-to-day operations
Take the initiative to discuss this with your insurance provider today and ensure both you and your property manager are properly protected.
For more resources on property management and investment strategies, explore PMI Bmore Metro’s blog.
