Managing a property isn’t just about keeping tenants happy or maintaining curb appeal—it’s about protecting your investment from the unexpected.
And while most property managers think they’re fully covered, the truth is that small gaps in coverage can lead to massive financial fallout.
In this blog, we’ll explore where even the most experienced property managers tend to miss the mark when it comes to insurance.
1. Tenant-Caused Damage That Isn’t Covered
You might assume your commercial or residential policy covers any damage that happens inside the unit—but that’s not always true. If a tenant’s negligence causes water damage, fire, or mold growth, the cost to repair it may not be included in your standard property coverage.
It’s crucial to confirm whether your property management insurance policy includes tenant negligence protection or if you need a rider to bridge that gap. Otherwise, you could be stuck with the bill for something that wasn’t your fault.
2. Ordinance or Law Coverage
After a loss, rebuilding to meet current building codes can be shockingly expensive—especially for older structures. Many policies only cover the cost to rebuild what was there before, not what’s now required by updated regulations.
Ordinance or law coverage helps pay for those code-compliance upgrades, demolition costs, and rebuilds to meet modern safety standards. Without it, you’re forced to cover the difference out-of-pocket.
3. Loss of Rental Income
If a fire, storm, or plumbing disaster makes a property uninhabitable, you could lose months of rental income. Some property managers think their property insurance automatically covers lost rent—but it doesn’t always.
Check for loss of income or business interruption coverage that replaces the rent you’d otherwise collect while repairs are made.
4. Equipment Breakdown
From HVAC systems to elevators, today’s properties rely on complex mechanical equipment, and when those systems fail, repairs can cost tens of thousands of dollars.
Standard property insurance typically only covers losses caused by “external” events like fire or wind. Equipment breakdown coverage, on the other hand, protects against mechanical or electrical failure—even when it’s due to a short circuit or internal malfunction.
5. Cyber Liability for Property Managers
Property managers handle sensitive tenant information, such as Social Security numbers, payment data, background checks, and more. If a hacker accesses your systems, the fallout can be catastrophic.
Cyber liability insurance covers notification costs, legal fees, and even ransom payments in the event of a cyberattack. It’s one of the fastest-growing coverage needs in real estate management today, and still one of the most overlooked.
6. Non-Owned Auto Coverage
Do you or your employees ever use personal vehicles for business errands, like picking up supplies or meeting vendors? If so, your business could be liable for any accident that occurs on the clock. Non-owned auto liability coverage protects your company if an employee’s personal insurance falls short during a business-related accident.
7. Flood and Earthquake Exclusions
Many property managers believe their “all-risk” policy covers floods or earthquakes. Unfortunately, those issues are almost always excluded from standard commercial property insurance. Even if your property isn’t in a designated flood zone, one heavy storm or burst drainage line can cause significant losses. Separate policies or endorsements are the only way to stay protected.
Partner with BME Commercial Insurance to Secure Comprehensive Insurance for Property Managers
Insurance gaps don’t seem dangerous—until they do. Every property is different, and what’s enough coverage for one manager could leave another fully exposed.
At BME Commercial Insurance, we specialize in helping property owners and managers identify hidden coverage gaps before they turn into claims. Our team can review your existing policies and help you build a plan that accurately reflects the risks you face day to day. From general liability insurance to commercial property insurance and beyond—we have you covered. Reach out now to get started.
