Why Property Managers Need “Contingent BI/PD” E&O Coverage

Property Management E&O Claim BI/PD

Do You Have the Coverage You Think You Do?

Would you expect your E&O insurance to cover you if a guest at a vacation rental is injured when a balcony railing collapses? Or if a tenant sues over property damage caused by a delayed maintenance issue? Most property managers would assume so—but in reality, these claims are excluded from the vast majority of E&O policies!

Most property managers are left with a critical gap in protection, as these claims often arise from professional duties like maintenance oversight or alleged failure to disclose hazards.

Property Management Services

Contingent Bodily Injury and Property Damage (BI/PD) Errors & Omissions coverage is designed to address these exact scenarios. Let’s dive deeper into what Contingent BI/PD is, share real-world examples, and explain why this coverage is essential for property management professionals, but often missing from policies.

What Is Contingent BI/PD for Property Managers?

Contingent bodily injury / property damage E&O claims are when anyone alleges that negligence in the performance of professional services resulted in physical harm, illness, death, emotional distress, mental anguish, loss or use to property, or property damage.

Contingent BI/PD claims are among the most frequent and expensive risks for property managers.

Consider these examples: A property manager delays fixing a tenant’s report of a malfunctioning stove. Hours later, the stove sparks a kitchen fire that causes injuries and severe property damage. The tenant sues, claiming that the property manager was negligent in the performance of their professional services. 

Property Manager Property Damage Professional Liability

In another case, a tenant moves into a rental property and contracts a serious illness due to undisclosed mold growth. The tenant alleges that the property manager failed to conduct proper inspections or disclose the hazardous condition before move-in.

Or, a guest at a short-term rental falls through a deck that allegedly should have been repaired by the vacation rental management company.

These are real, everyday risks that property managers face when their professional services are called into question. Without robust E&O Contingent BI/PD coverage, the financial impact could be devastating.

Why General Liability Alone Isn’t Enough

Many property managers assume that their General Liability (GL) insurance covers all of these potential claims. The truth is that GL policies typically exclude any claims tied to professional services. This means that claims resulting from property management professional services are not covered under most General Liability insurance policies.

For example: A tenant injures themselves after slipping on an icy walkway outside a managed property. While some GL insurance might cover the injury, it probably won’t apply if the claim alleges negligence in the manager’s professional duties, such as failure to arrange timely snow removal.

Rental management E&O

E&O insurance that covers Contingent Bodily Injury/Property Damage claims fills this coverage gap. The Insurance Journal reported on this fact in their article, “Skyrocketing Bodily Injury Claims Spill Over to Professional Liability Insurance Market.”

That said, the E&O policies that do cover BI/PD claims typically require that you do also maintain General Liability coverage. GL is still a crucial coverage.

The Gaps in E&O BI/PD Coverage for Property Managers

Despite being one of the top claims for property managers, many E&O policies either exclude or severely limit Contingent BI/PD E&O coverage.

Here’s what property managers need to watch for:

  • Exclusions for “Bodily Injury” and “Property Damage” in your professional liability policy.
  • Limited definitions: Some policies narrowly define what constitutes BI/PD, excluding key scenarios such as tenant injury or damage caused by overlooked repairs.
  • Low sublimits: Some policies that do include BI/PD coverage often cap it at much lower amounts of coverage, like $10,000 to $50,000.  These amounts often barely cover legal fees, let alone settlements or judgments.
  • BI/PD exclusions for Property Management Activities: Some real estate E&O policies exclude claims stemming from property management activities, and only cover some real estate related BI/PD claims, like lockbox or open house scenarios.

What Errors & Omissions Coverage to Look For

BI/PD claims are just one part of the equation. Property management E&O policies often have other gaps. Commonly limited coverages include Fair Housing/Discrimination claims, the management of owned properties, or claims like the alleged failure to disclose mold or radon. To understand these additional gaps in detail, check out our article on the Top 5 Coverages Missing from Property Management E&O Policies.

Property Management Errors and Omissions Quote Checklist

To fully protect your business, you need an E&O policy that provides robust BI/PD coverage. Look for a policy that:

  • Covers BI/PD claims up to the full policy limits (ideally $1,000,000 or more).
  • Encompasses property management-specific services, including tenant and guest injuries and maintenance oversights.
  • Provides protection for vacation rental management, HOA/condo management, leasing, and real estate operations.

The best policies go beyond basic coverage to address the nuanced risks property managers face daily.

Protect Your Business from Costly Claims

At FirmSecured, we specialize in customized E&O solutions for property managers and real estate agents.

Whether you oversee vacation rentals, apartment complexes, or residential units, our team can help you identify and close gaps in your coverage.

Ready to secure your protection? Call us today at (423) 777-6684 to review your current policy or explore options for comprehensive E&O insurance with BI/PD coverage. Or, you can book some time on our calendar below to discuss your unique needs and policy on a Google Meet call.

 

property management insurance quote

Jonathan Lugo Insurance

About the Author

Jonathan Lugo

Founder | FirmSecured

I am the founder of the FirmSecured program powered by Veritas Risk Management. I’m licensed in over 30 states and love helping real estate brokers find quality E&O and cyber liability insurance coverage. I currently live in Northeast Tennessee with my incredible wife, Madeline.