Additionally Insured vs. Additional Interest
As the owner of the property, your insurance policy not only protects the physical property itself, but you. For example, your home insurance policy provides protection in the event that a lawsuit is brought against you by a tenant or one of their guests who injures themselves on the property. Most policies also protect against damages sought by a tenant after a fire, burglary, water leak, or other incident in the property. When we get sued, we want to be included in your defense. This happens about once every year by a tenant who claims they were injured in a “Slip and Fall.” It’s annoying and there isn’t much we can do about it. Additional interest means we are notified of any insurance policy changes. We don’t care about that.
Talk to your insurance company and ask them about adding your property manager as an additional insured. Generally, this conversation goes in one of three directions:
- First, your insurance company may offer to add them as an “additional interest.” At face-value, this might seem like what you’re looking for. However, all “an additional interest” designates is that the property manager gets policy-related notifications. You need them to be an additional insured.
- The insurer may want to charge you a fee to make the change to your policy. Our recommendation is that you either ask them to waive this charge, or that you take the cost into consideration when shopping for policies in the future. There are many competitive policies out there with no charge for an additional insured.
- As a final note, there is a chance that the insurance company will reject your request altogether. After all, this is increasing the number of parties covered by the policy, and therefore increasing their risk. However, insurance policies and companies do have an incentive to be competitive against other policies out there in the market. If your current insurer denies your request altogether and doesn’t provide you with options, tell them you plan to start shopping for a new policy.
Either way, it’s important that you come out of this process with the property manager added to the policy. This addition closes a critical loophole and ensures that everyone in the home rental system—tenant, property manager, and you, the property owner—has insurance coverage. After all, property manager is a mutually beneficial system for everyone involved, so long as everyone is adequately insured.