If someone walking by a property engages with a tenant and ultimately ends up attacking that individual, is the property manager responsible? From conventional to virtual, the range of risks property managers face demand an exhaustive assessment, in addition to both general liability and professional insurance coverage.
“Property managers have to have good insurance, but also know what particular pain points their jurisdiction, the attorneys and judges will hold the property manager liable for ,” says Libby Ekre, CPM, co-owner of Phoenix-based Bryten Real Estate Partners and 2024 IREM President.
What Are Property Managers Responsible For?
General liability covers property managers from bodily injury, property damage, advertising injury, copyright infringement, reputational harm and other claims. Professional liability, also known as errors and omissions insurance, will protect managers from lawsuits regarding professional service mistakes, including negligence and inaccurate advice. Ekre adds that tenant discrimination insurance, or employment practices liability (EPL) coverage, is also important to protect against tenant claims of unfair treatment.
Risk mitigation and protection begin with forming a partnership with the property manager’s insurance agency. With both manager and owner interests in mind, the agent can inspect properties, looking for slip and fall hazards and other areas that can be considered high risk. The property manager should take proactive measures to review and implement procedures and protocols to help prevent costly claims and keep insurance costs minimized.
Cybersecurity Is a Growing Concern
Cyberattacks have become a heightened threat for property managers in the last year, according to the IREM president. Threats can come in the form of email scams, hacks into resident files and even AI-generated calls to accountants mimicking the property owner's voice in a wire transfer request.
“That area is probably number one on our list of security concerns,” Ekre says. “Cybercriminals are crafty and super intelligent when it comes to your business world and can exploit accounting events or notifications to steal money or tenants’ personal information.”
Lightening the Load
With all the risk management efforts and insurance coverage concerns, property managers should establish what they would not be liable for. It’s a “really difficult question,” says Ekre, and the answer might not be too satisfying — “it depends.” Ekre says it’s conditional on each situation and jurisdiction.
With so many scenarios that need to be covered, she asserts that property managers should depend on a good lawyer who can ensure a sound property management contract. For instance, in the aforementioned tenant-stranger altercation, the property owner and manager were found liable.
“We all have to be responsible for our own selves and have awareness of what’s around us, but that's not always how a tenant or a judge sees things,” says Ekre. “Because of that, and all the other scenarios that can play out with a property, managers need to make sure they have coverage for all areas and a strong relationship with their insurance broker.”
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Brian A. Lee
Brian A. Lee is an Atlanta-based freelance writer and former editor of Western Real Estate Business magazine. The Wake Forest and University of Georgia graduate has covered commercial real estate since 2000.
