Insurance Recommendations for Rental Management Agency

[Blake Smith]

First, thanks to all the posters on here for all the knowledge on this forum.  I've been browsing for a few years, it's a great resource.  Hopefully I can add something with this discussion, as I did not see much that was related in a search. 

I've recently started a short-term rental management company.  We've grown quickly and now manage 25 properties, mainly for short-term (airbnb/vrbo/etc) stays but occasionally stretching into 1-3 month rentals.  We market and list the properties, take bookings, and handle all rental aspects.  We also provide some maintenance services for our contracted homeowners, both lining up contractors and occasionally fixing things ourselves.  

We have professional liability insurance, but someone I was speaking to recently recommended carrying E&O (errors and omissions) insurance. I've spoken with two brokers, but unfortunately feel like I'm getting advice from the shark about what's for dinner. Hoping that a non-interested party that's familiar with this landscape can offer some advice. Carry one? Carry both? Which one is better if only carrying one? It looks like about $1200 for professional liability and $1800 for E&O.

My specific concerns are something like a trip & fall in the winter, the renter claims it was the property owner's fault due to improper maintenance and also includes our company in the suit.  Or some sort of deferred maintenance that causes an issue, and again as the management agent we are named in the suit. Or a contractor we hired to fix something at a house we manage causes an issue, and the homeowner sues us for damages/reparations/liability.  Or a homeowner somehow claims we were negligent in our duties and sues us.

These are the specific instances I can think of needing some sort of insurance, I'm sure there are others I haven't considered.  We're relatively new at this and don't want to learn by making the mistake - hopefully we can stay in front of it.  I appreciate any help in delineating the difference between the two types of insurance, recommendations for companies, and considerations on other situations to make sure we are covered.  

[Account Closed]

Hi Blake, 

Congratulations on growing your business so quickly, especially in the current state of the market. 

I think you may have been misinformed. As a licensed insurance agent, I can tell E&O and professional liability are essentially the same thing. If you carry one, you carry the other. I am not sure why you were given two different quotes for professional liability and E&O – my guess is one of the quotes has more add-on coverages and consequently is more expensive.

In regards to the contractor question, just make sure that you always use licensed contractors or handy men and verify that they have a GC or worker’s comp policy in place. In your example, if the contractor were to cause an issue, their GC or Worker’s comp will come in play.

All good questions. I think it’s very important that you are thinking about these things. I hope this helps and let me know if you have any other questions.