Getting insurance for your property management business is essential.
Property management businesses need to be protected against things like wrongful eviction, employment disputes, and violations of licensing and permit violations.
For example, your business evicts a tenant at one of its properties in a way that violates the tenant’s rights, or a tenant claims that you failed to repair their furnace in a timely manner during the winter.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Property Management Business
General liability insurance is — generally speaking — one of the most important insurance policies for property management businesses.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Some other policies to bear in mind when purchasing coverage for your property management business include:
- Professional liability insurance: Covers any settlements and legal costs arising from tenant claims related to negligence or malpractice filed against your business.
- Commercial auto insurance: A legal requirement for any vehicles used by businesses on public roads for primarily commercial purposes.
- Workers’ compensation insurance: Allows your employees to claim compensation if they are injured or fall ill due to a work-related activity.
Your property management business will typically have the option to decide between two distinct types of insurers:
- Traditional brick-and-mortar insurers — Such as The Hartford, Hiscox, and Nationwide.
- Online insurers — Such as Next and Tivly.
We typically recommend businesses opt for online insurers as they offer a great balance between affordability and quality — particularly since these firms make use of AI to customize each policy to their customers’ needs.
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Cost of General Liability Insurance
On average, property management businesses in America spend between $400 - $700 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a property management business to other professional industries using the graph below:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Property Management Business
Example 1: While bringing some files in from a storeroom, an employee accidentally knocks a client to the ground. The client breaks an arm in the fall and decides to sue your business for damages. General liability insurance would pay for your legal defense and any required settlement.
Example 2: A competitor files a lawsuit against you, claiming you libeled his business, While you disagree with the accusation, you know you need a lawyer to protect your interests. General liability insurance would cover your attorney fees and any required settlement.
Example 3: While visiting your place of business, a client slips on wet flooring in your restroom, breaks a wrist, and asks your company to pay for her medical treatment because you didn’t mark the wet floor. General liability insurance would pay for her medical expenses.
Other Types of Coverage Property Management Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Professional Liability Insurance
While you work hard to satisfy all of your clients with your property management services, there’s always a chance someone might decide you made a mistake that caused them injury. If a client sues your business for negligence, professional liability insurance would cover your legal fees and any required settlement.
Commercial Auto Insurance
Any vehicle you use primarily for your property management business requires commercial auto insurance to protect the vehicle, driver, and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured, but also sufficient protection for any business materials you carry in your vehicle.
Workers’ Compensation Insurance
If you have any employees, most states will require you to carry workers’ compensation insurance for your part-time and full-time workers. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a workplace accident.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your property management business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Property Management Business Insurance FAQ
Can I buy business insurance online for my property management business?
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a property management business?
Yes. Put simply, it is essential to acquire appropriate business insurance before your property management business can begin its operations.
Doing so not only leaves your business less affected by any of the potential risks it could face, it also helps keep it operating legally (e.g., in cases where policies like commercial auto or workers’ compensation insurance are obligated).
Will insurance protect my property management business from everything?
Not necessarily. Certain exceptions may be written directly into your property management business insurance policy, and some perils may be entirely uninsurable.
Do I need business insurance if I already have an LLC?
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.