Whether you explicitly perform Property Management services, or you provide property management services as part of a transaction, there are significant exposures to E&O claims resulting from bodily injury or property damage. Keep in mind that if you are working with REO properties, Foreclosures or Short Sales, you are performing property management services.
Most Real Estate E&O insurance policies include some coverage for bodily injury and property damage claims, but the scope of that coverage varies from policy to policy. Some E&O policies only cover bodily injury and property damage claims resulting from an open house or bodily injury and property damage resulting from the use of a lockbox. The broadest of policies provides bodily injury and property damage coverage that applies to all covered services.
Examples of bodily injury and property damage claims are frozen pipes in a foreclosure property. The bank asked you to turn off the water and now you must replace the floor. Items that a former tenant says that you threw away during a trash out that are now incredibly valuable. Bodily injury claims can result from a rental property with mold infestation or a client that falls through the rotten deck.
In many instances, these types of claims will be covered under the property owner’s insurance policy, but in the absence of the homeowner’s policy, you will be held responsible for the claim. Your General Liability policy excludes coverage for claims arising from the performance of professional services, so coverage for bodily injury and property damage claims is a very important part of your E&O policy.