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There are recognizable risks involved in working in the property management industry. Much of the income potential for rentals and leasing companies relies heavily on trusting tenants to pay their rent.
In order to help cover the risks involved with property management, managers should consider various insurance types. Obtaining the right insurance is a key method making sure your company sticks avoids any unexpected stumbling blocks.
General Liability insurance covers property damages and personal injuries that occur on your business property, even before a lease has been signed.
Example: A tenant renting out offices in your business property falls into a door, breaking it and injuring themselves. GL covers both medical and repair costs.
A BOP typically combines the features of General Liability and Commercial Property Insurance at a reduced rate to give your business double the protection.
Example: A tenant alleges false advertising during the same time that they get injured on the property. A Business Owners Policy covers both.
Errors & Omissions insurance, also known as Professional Liability Insurance, protects a business from a lawsuit to claim damages for loss following a decision you or an employee made while providing professional services.
Example: Evicting a lessee causes them to lose their job and income. Your defence costs will be covered by E&O if they sue you.
If you're leasing property and you employ staff, Workers Compensation insurance is mandatory, except in Texas.
Example: While your employee is maintaining the upkeep of your property and becomes injured on the job, Workers Compensation covers their medical fees and lost wages while they're recovering.
If a vehicle you own is either registered to your business or is primarily used for business, you need Commercial Auto Insurance.
Example: While driving to your property your business car collides with a motorist, injury them and damaging their car. Commercial Auto insurance covers their medical costs and car repair costs.
Commercial Property Insurance will provide coverage for your properties in case damage renders them impossible to rent or lease.
Example: Your property is damaged from a storm and you're unable to lease it. Commercial Property Insurance will cover your lost income.
Cyber liability insurance covers the costs or losses resulting from a cyber attack.
Example: A list of your renters and their personal data, including bank details, are stolen from your database. Cyber liability insurance will pay for their recovery or added protection.
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Who neeeds Rentals and Leasing Insurance?
Anyone who owns property that they lease or rent should obtain insurance, including those who personally manage or hire someone to manage their owned commercial or residential properties.
The rentals and leasing or management company must deal directly with these companies or residents, and must be in charge of deciding when to lease the property, and when to evict businesses or individuals.
How Much Does Insurance Cost?
Insurance costs for rentals and leasing companies can vary. The size of the properties and the number of properties will have a direct impact on how much insurance you will need to purchase.
To insure you purchase the right amount of insurance, it is important to obtain a professionally-crafted quote. This will help you get the right amount of insurance for your specific needs.