Rental Management Insurance Questions
April 13, 2018
A Burning Question
A man was barbecuing a steak on the built-in grill of the house he rented, when a small propane tank malfunctioned and started a fire. The fire quickly spread from the patio to the main portion of the house, where it caused $225,000 in damages. Here’s the burning question on all our minds: who was responsible for paying the cost of the damages—the tenant or the owner? Austin Fleck Property Management, serving Gilbert, AZ and surrounding areas, understands there are few simple, straightforward answers to questions like these. We’re rental management specialists, and we care about our business relationship with you.
In this case, the wise landlord had required that the tenant carry liability insurance and that the landlord be listed as Additional Insured. The cause of the fire was determined as operator error, which meant the landlord could file a claim with the tenant’s insurance company for the loss. Since the owner was listed on the tenant’s policy as additional insured, the loss didn’t count against the owner’s policy.
What Does Additional Insured Mean?
In our last blog post we discussed the difference between having a Homeowner’s insurance policy or a Landlord Insurance policy. In today’s post, we’ll talk about two aspects of insurance that are valuable for protecting business relationships between rental associates. In the insurance business, an Additional Insured is a person or organization that is included in an insurance policy, but is not the Named Insured. In most insurance policies, the additional insured is covered under the same terms as the named insured. In automobile policies, for instance, Additional Insured is a blanket coverage of anyone who drives a vehicle with the owner’s permission. The additional insured driver receives the same coverage under the owner’s policy that owner himself receives.
What Does Additional Interest Mean?
Additional Interest is different from Additional Insured. A person or organization listed as Additional Interest on a Named Insured policy is not covered for any liability under that policy. The reason for being listed as an Additional Interest on a policy is for the purpose of notification in the event of changes to the Named Insured’s policy. For example, if Austin Fleck Property Management is listed as Additional Interest on your landlord policy, we would be notified of any changes to, or cancellation of, your policy. It makes sense to include us as an Additional Interest, simply to maintain a good working relationship.
Protecting Business Relationships
In real estate, Additional Insured is also used as a means to protect a valued relationship between business entities. For example, though a property management company isn’t the homeowner and they don’t have a financial interest in the property, they’re still taking on a measure of risk concerning that home. Property management insurance policies will cover liability claims concerning that management company’s services, but in matters concerning the home itself—e.g., someone injuring themselves on the property, or fire, or theft—the property management company is not typically covered. So the benefit of being listed on a landlord policy as Additional Insured has to do with being covered for matters related to the home itself, to protect property management companies from potential claims.
This is a great strategy for keeping our business relationship on excellent terms, because nobody wants to get burned. Should you consider adding Austin Fleck Property Management as an additional interest and an additional insured on your policy? Since there is typically no charge to include us as Additional Interest and Additional Insured, we say, absolutely. In rental management, it’s good policy for good relationships.
Images used under creative commons license – commercial use (4/12/2018) Amtec Staffing (Flickr)