Nov 05 Invest the Time to Manage Your Risk
Anyone who works in property management would agree that running a property can expose both the property owner and the managing agent to a significant amount of risk. Try as you may, sometimes it’s simply impossible to completely eliminate all of the risks. The best you can do is implement controls to help mitigate those risks.
One of those controls is ensuring that the vendors with whom you do business are not only adequately insured for the type of service they will be providing to your property, but perhaps more importantly, ensuring that the coverage under their respective policies extend to the property owner, the managing agent and their respective agents.
One of the primary ways to ensure that the property owner, the managing agent, and their respective affiliates (collectively “you”) are appropriately covered is through the “Additional Insured” endorsement to the vendor’s policy. Simply put, you want to make sure that the vendor has added you to his/her policy so in the event the vendor acts wrongfully or negligently in such a way that it exposes you to liability, you can make a claim to his/her carrier for coverage.
However, the steps necessary to ensure that your vendor has added these coverages to his policy can be quite burdensome and time-consuming to the property manager who is focused on running his/her property. It is even more so for the manager who is managing a property layered with various subsidies and working hard to adhere to the various deadlines and requirements imposed by these subsides. Indeed, the last thing he/she wants is to add another task to his/her to-do list.
Nonetheless, I cannot underscore how critical it is to ensure that each vendor provides you with the appropriate documentation evidencing that they have actually added you as an “Additional Insured” on their policy. Mistakenly, many managers think they’ve satisfied this requirement by obtaining a Certificate of Insurance (“COI”). However, a COI is simply evidence that the vendor has insurance, and while that is certainly an important document to have, it provides no evidence that you are covered, even if you’re listed as the “Certificate Holder” on that COI.
Unfortunately, in an effort to get around what managers perceive as a tedious task, they will simply accept the COI as sufficient documentation or try to reason that the service the vendor is providing does not expose them to liability. Unfortunately, as we’ve learned at our company, what on the surface may seem to be the most risk-free service, can expose the owner/managing agent to significant liability. For example, we once had a vendor install an overhead door. On the surface, there’s no real liability there since they had installed thousands of overhead doors for companies like ours. However, the door malfunctioned sometime after installation and severely injured someone. On another occasion, a security officer whom was hired to protect the tenants and maintain the peace, ended up having an altercation with a tenant and fatally wounded the tenant. Another example is where one of the employees of the landscaping vendor got into an altercation with one of the tenants, which resulted in injuries to both individuals. Because we require our vendors to add us as an “Additional Insured”, we were not held liable for any of these unfortunate incidents.
As these examples show, while the process involved in ensuring that you are listed as an “Additional Insured” on your vendors’ policies may be an arduous one, the benefit derived from taking the time to go those extra steps can save you millions of dollars in the long run.
Yasmine S. Murray, Esq.
Executive Vice President
Yasmine S. Murray, Esq. is Executive Vice President, General Counsel and Corporate Secretary of H. J. Russell & Company. As the company’s General Counsel, she manages Russell’s legal affairs and works diligently to mitigate risks company-wide.
Yasmine brings a strong commitment to the firm’s core values and a deep understanding of the unique legal issues it faces. She is a member of the American Bar Association, Association of Corporate Counsel, Atlanta Business League, Georgia Association of Black Women Attorneys, Minority Corporate Counsel Association, National Association of Professional Women, State Bar of Georgia, and the Urban Land Institute. Also, she serves on the Council for Quality Growth’s 2019 Government Affairs Task Force.