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An insurance policy on a rental is often called a Rental Dwelling Policy or RDP.
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It is the policy of I Heart Real Estate Property Management that every owner adds our company as an “Additional Insured” to their rental policy. Here is the language in the Property Management agreement.
”Add I Heart Real Estate Property Management LLC / Core Rentals LLC dba I Heart Real Estate Property Management as an additional insured on its landlord/rental dwelling insurance policy (minimum $1,000,000 liability) and provide a Certificate of Insurance within ten (10) days of the Effective Date;”
Property owners are required to carry insurance on any property we manage, per the terms of the property management agreement. Property owners are also required to add our company as “additional insured” on each insurance policy. Some people confuse “Additionally Insured” with “Additional Interest.” They may sound similar, but they are quite different. “Additional Interest” does not extend coverage. It only notifies the manager if a policy lapses, is canceled, or is changed. Adding your property manager as “additionally insured” does not give the manager any financial interest in your home. It simply provides insurance protection for both the homeowner and the property manager.
When you hire a property manager, they take on most responsibilities, much like the property owner. The property manager becomes the agent of the property owner. If a personal injury occurs for any reason, the property manager is often the first target, in place of the owner. Reputable property management firms include strong indemnification and hold harmless language in their contracts. When the management company is correctly listed as an Additional Insured, coverage automatically extends to both parties.
In a worst-case scenario, if litigation occurs, both the property owner and property manager will likely be named as co-defendants. Coverage that extends to both parties creates a unified defense, with one insurance company defending both parties. This streamlines the defense and can reduce legal expenses, which the owner or insurance company is ultimately responsible for.
There is a common misunderstanding that insurance companies do not want property managers added as additional insured. This often comes from insurance agents who focus on personal lines and do not understand landlord insurance.
The insurance companies specializing in landlord insurance will not only put the PM on the policy as an additional insured, but may also give the client a discount for doing so because the risk goes down with professional management. DIY landlords file more claims and they make insurance companies nervous.