About Judy

Property Management Mentor

Additional Insured vs. Additional Interest


This is a subject near and dear to my heart, as I’ve been chasing insurance companies for the better part of the last two weeks, struggling to get proper evidence of coverage for my owner/clients’ properties. What continues to surprise me, is the fact that the insurance companies often play as though they don’t understand what we want. simple-handshake

In part, our property management agreement (PMA) states,

“LIABILITY INSURANCE – Owner shall obtain and keep in force adequate insurance against damage and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management operation, or maintenance of the Premises. Liability insurance shall be adequate to protect the interest of both Owner and Agent.  Owner shall furnish Agent with proof of fire insurance policies in force and shall obtain adequate vandalism coverage for the Premises.  The deductible required under all such insurance policies shall be Owner’s expense. Owner agrees to name Agent as an “additional insured” on its liability and fire insurance policy, and furnish Agent with certificates evidencing such insurance within ten (10) days of the execution of this Agreement. In no event will such liability coverage be less than $500,000 in value. Said policies shall provide that notice of default or cancellation shall be sent to Agent as well as to Owner, and shall require a minimum of ten (10) days’ written notice to Agent before any cancellation of or changes to said policies.”

There’s a good reason for this provision, and I understand it’s a common clause in PMAs across the country. Yet, property managers often tell me they aren’t able to obtain the certificates and endorsements to evidence the required coverage. Instead, they receive certificates naming the property management company as having “additional interest” in the policy. Good enough, right? Wrong.

In my search for articles on this topic, to help explain the necessity of this provision to my owner/clients, I ran across this great piece by Dallin Wall. In part, he states:

“[Additional Insured] is probably the single most misunderstood insurance term that is misused and misapplied on a regular basis. An “Additional Insured” is a party listed on an insurance policy that has some type of liability interest in the property. The “Additional Insured” has absolutely no right or authority to make any policy changes or to cancel the policy. Also, contrary to popular belief, an “Additional Insured” is ONLY afforded liability protection under the liability portion of the policy and there is no coverage whatsoever for physical losses resulting from such things as vandalism, theft, fire, wind and hail, and so on.

However, if there was litigation involving the property or its use and the “Additional Insured” was named in the suit for any reason, the policy provides liability protection for legal and defense costs for the “Additional Insured” and the insurance company issuing the coverage would have a ‘duty to defend’ any and all “Additional Insured parties” listed in the policy.”

Bingo. And, no wonder the insurance companies aren’t overly anxious to add us to our owner/clients’ policies as “additional insureds!” It means they’d have to pay to defend us, if and when somebody files a lawsuit in connection with the operation and management of the property. Yet, doesn’t that requirement make sense, from a property management perspective? It sure does, and I’ll explain why, in just a moment.

Even if someone tells you “additional interest” means the same thing, don’t take their word for it. In his article, Mr. Wall goes on to say:

“An “Additional Interest” is nothing like the “Additional Insured” though they sound similar. An “Additional Interest” is a party listed in an insurance policy that has an “interest” in being notified whenever a policy cancels or has a major change made to it. In other words, this party is simply being made aware of the change – nothing else. There is absolutely no coverage whatsoever afforded to an Additional Interest.”

Being made aware of changes to the policy is a good thing, yes. But, as property managers, we need the liability coverage, too!

Why is it so important for the property manager to be named “Additionally Insured” on the owner’s liability policy?

home-fireThe example I’m about to share is a very recent, true story. Although I was not a party to either the PMA or the lease agreement discussed in this example, I’m quite familiar with the case. It’s just one of many such cases, I hear of from property managers all over the country. Perhaps, you might be able to identify with the property management company, in this one.

A full-service real estate brokerage managed several units for its investor-clients, as part of the company’s business model. Although the company’s primary real estate focus was listing and sales, the property management accounts brought in a stable income, and helped maintain client loyalty. Several of the company’s agents were managing a handful of properties, here and there. One such agent happened to manage a small 3-bedroom home with an attached garage. The home was pretty standard for the area, with a compact design. Natural gas central heat, gas water heater (located in the garage), all appliances, newer carpet, average-sized rooms, and a laundry area/mud room just off the garage. The renters the agent placed in the home seemed to like the floor plan and amenities, were in agreement with the company’s non-smoking policy and other rules, and everything was humming along nicely.

One of the renters was fond of older cars. He liked to work on them – just tinker, really – in his spare time. The garage of this home provided the space he needed for that purpose. Until one day, the unthinkable happened. A huge explosion and fire; it’s center, in the garage. The home was nearly destroyed, and the tenant who was in the garage at the time was very badly injured. (Remember, I mentioned the location of the water heater?)

The tenant sued. He named the owner and the property management company in the lawsuit. And, although the PMA required the agent’s company to be named as “additional insured” on the owner’s liability policy, that coverage did not exist. The owner’s insurance company defended the owner’s interests, and the agent’s Errors & Omissions policy stepped up to defend the agent. Two different insurance companies, defending against the tenant’s claims.

Does it matter who was at fault?

Was the tenant smoking, in violation of his lease agreement? Was the water heater malfunctioning and leaking gas? Was the tenant mishandling gasoline he had stored in the garage? Again, I have to ask, ‘Does it matter?’ No, it really doesn’t. Not for purposes of this example. You see, as the litigation ensued, instead of pointing a single focus toward the interests of the owner and his agent (the property management company) in defending the Landlord’s interests, the two insurance companies on the defense side scattered their efforts toward not only the case with the tenant, but toward each other! Litigation costs were easily doubled, by having two different companies defending the same action. And, the end result for the real estate brokerage was marked by considerably higher premiums for Errors & Omissions coverage, at the next renewal. Had the owner’s insurance covered the property manager’s liability, the Errors & Omissions carrier would likely never have been involved in the litigation, at all.


The next time an insurance agent tells you that your company doesn’t need to be named as “Additional Insured” on the property owner’s liability policy, I hope you will remember this story. Have you had difficulty getting evidence of “Additional Insured” coverage on your owner/clients’ policies? Please share your best practices for handling this important task, by leaving a comment on this post. 







Converting Rentals to 55+ Status (HOPA)


seniorsThe Reader’s Digest version of this post, for those who prefer that kind of thing, is “No.” Just no. Only in very rare cases, can you convert an existing rental property from a traditional residential rental (welcoming families with children), to a 55+ property, under the exemptions contained in the Housing for Older Persons Act of 1995 (HOPA).

A property manager recently asked me whether her client could declare the client’s duplex a “55+ Community,” ‘since it’s a multifamily property.’

First, I suggested he talk to his lawyer, or Silver State Fair Housing Council. Then, “A duplex isn’t a ‘multifamily’ property. That term generally applies to 4+ units. Since this property is not part of a larger ‘association’ of similar properties who’ve formed an association… and, since there are no governing documents for your client’s property that address any kind of HOPA exemption, no. No, your client can’t do that.”  Continue reading


Updated Class Schedule for Reno NV


Wandbild_eines_SeiltänzersIn response to numerous requests for a CE class in Property Management, I’m pleased to announce we’ve just scheduled “Risk Reduction Strategies for Property Managers” to be held in Reno on November 13th. Ticor Academy, a division of Ticor Title is sponsoring the course. (Thanks Ticor Team!) Please contact Ticor Academy for more information and registration. General details of the class are here.

Hope to see you in November!

Warm regards,




Marketing Property Management Services


FanfareIf you’ve been in this business for a while, you’ve probably noticed how competitive property management has become! It seems that everyone is a Property Manager! It’s a much bigger challenge than it used to be, to attract and keep a good client base. A solid marketing campaign, consistently applied, will set you apart from your competition.


Here are a few proven tips…

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Residential Property Maintenance – Systems and Procedures


HomeRepairAs property managers, one of our most important responsibilities is to oversee the maintenance and repair of the homes we manage. In fact, most states’ laws address this, in one form or another. For example, Nevada law, in its Property Management licensing section, states:

NRS 645.019  “Property management” defined.  “Property management” means the physical, administrative or financial maintenance and management of real property, or the supervision of such activities for a fee, commission or other compensation or valuable consideration, pursuant to a property management agreement.
(Added to NRS by 1997, 954; A 2003, 932)  (Emphasis added)

Despite  guidance of both law and “common sense,” too often, our responsibility for overseeing the physical maintenance of the properties we manage is handled in a reactive, rather than proactive, manner. We wait for something to break, as opposed to thinking ahead and planning for maintenance and repair, before things go wrong. In upcoming posts, we’ll explore residential property maintenance, from the property manager’s perspective.   Continue reading


Client Retention – Property Management Style



With so many of our owner/clients falling into the role of Landlord by chance, rather than by choice in the last few years, it’s no wonder we’re facing challenges gaining their loyalty. Often times, the rental property owner doesn’t have the slightest clue how to manage such an investment. In many cases, the property wasn’t originally purchased as a rental. The investment strategy, if one exists at all, is vague and constantly shifting.


A single expense, a “bad” tenant, or a month without income, and the “Accidental Landlord” panics. “How am I going to make my mortgage payment?” “I can’t afford to pay for that!” Does this sound familiar? Before you realize what’s happening, this property owner is moving on to what he perceives as greener pastures, with another property manager.


Gaining client loyalty is one of the greatest tests of a property manager. Without that loyalty, we cannot succeed. How can we, as professional property managers, create an environment in which the owner/client trusts us enough to remain loyal, even when management difficulties arise?


CB026637It starts before the contract is signed…   Continue reading


When Saving Time Can Cost You Time (and Money!)


As successful property managers, we quickly learn the importance of streamlining our policies and procedures, by establishing methods to save both time and effort. The profit margin in this business is tight, and if we fail to employ standardization and time-saving strategies, we’ll never succeed. I’ve noticed the average burnout time for most new property managers seems to be about 2 years. That’s how long it takes to realize it’s not a money-making business, unless we have policies and procedures in place that make the job doable.

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New Fair Housing Class – Available Nationally


justiceThe finishing touches have been applied, and it’s ready to go! A brand new class entitled “What’s New in Fair Housing: Cases, Settlements & Trends for Property Managers” is the result of many months of research, analysis, and compilation of information about the steadily-evolving trends and cases around the Federal Fair Housing Act, today. As a property manager, you’re undoubtedly aware of the huge impact this body of law has on our industry. Still, you may find yourself confused about such things as

  • The differences between a “service animal,” “therapy animal,” “companion animal,” and “assistance animal.”
  • What you can and cannot ask a prospective resident about his or her disability.
  • Whether you could be held liable for a discriminatory statement made by someone else.
  • Whether you can continue to use the same tenant qualification criteria you’ve always used, without risking a fair housing claim.

This course was designed as a 3-hour program, but can be extended to as many as 6 hours, depending on the needs of your organization. Believe me, there’s plenty of information to fill the time!

Not only will this class be an eye-opener for all who attend, you’ll actually take away some very practical tools for use in your day-to-day business – stuff you can put to work for your company right away!

Want more information? Ask away, by leaving a comment below!



Assistance Animal Fair Housing Case in Reno Nevada


BassetHot off the presses! The U.S. Department of Justice just announced a settlement with a Reno, NV apartment complex regarding the management’s treatment of residents with assistance animals. From the DOJ’s press release:

“The department’s complaint had alleged that the owners, employees and management company of Rosewood Park Apartments violated the Fair Housing Act by limiting individuals with certain assistance animals to a particular section of Rosewood Park Apartments; subjecting such individuals to pet fees; requiring assistance animals to be licensed or certified; and barring companion or uncertified service dogs altogether.”

The settlement in this case was $127,500, payable to a family who was denied housing (because of their assistance animal), Continue reading