Guides
Property management insurance costs and the cover behind them
What property management insurance costs by policy, from general liability and E&O to crime and cyber, and the cover each premium actually buys.
What to take away
- Property management insurance costs are quoted policy by policy. A management company buys five: general liability, errors and omissions, crime, cyber, and workers' compensation. Each answers a different claim.
- General liability is the cheapest and covers the fewest of this trade's real exposures. It responds to a slip in a common area, not to a screening complaint.
- Errors and omissions is the largest line for most firms. A company managing 150 units commonly pays $2,500 to $6,000 a year for a $1M limit. A 1,000-unit portfolio runs $10,000 to $25,000.
- Crime and cyber together usually cost less than the E&O premium. They cover the two losses that end a management company: stolen trust funds and a wire sent to a fraudster.
- Every figure below is a typical market range, not a quote. State, unit count, claims history and limits move the number, and only a licensed broker can bind coverage.
What each policy costs and what it answers
Premiums are quoted per policy, not as a bundle. The ranges below are what brokers writing management companies commonly see for a firm with a clean five-year claims history. Carriers that write this class include Philadelphia Insurance Companies, CNA, The Hartford, Travelers and Chubb.
Policy costs and cover
Policy
- General liability
- $600-$2,500
- Errors and omissions
- $2,500-$25,000
- Crime and fidelity
- $500-$2,000
- Cyber liability
- $800-$3,500
- Workers' comp
- $1.50-$8.00 per $100
Annual premium
- General liability
- Injury in common area
- Errors and omissions
- Screening, missed maintenance
- Crime and fidelity
- Employee diverting trust funds
- Cyber liability
- Tenant data exposure
- Workers' comp
- Injured maintenance tech
Pays for
- General liability
- Professional mistakes, theft
- Errors and omissions
- Intentional acts
- Crime and fidelity
- Unreported losses
- Cyber liability
- Pre-existing breaches
- Workers' comp
- Contractors with own cover
Excludes
- General liability
- Errors and omissions
- Crime and fidelity
- Cyber liability
- Workers' comp
What each policy costs
| Policy | Typical annual premium | What it pays for | What it excludes |
|---|---|---|---|
| General liability | $600 to $2,500 for a $1M/$2M limit | A tenant or visitor injured in a common area the company maintains | Professional mistakes, discrimination claims, theft of client money |
| Errors and omissions | $2,500 to $6,000 at 150 units; $10,000 to $25,000 at 1,000 units | Screening complaints, missed maintenance, failure to renew an owner's policy | Intentional acts, and some discrimination claims unless endorsed |
| Crime and fidelity | $500 to $2,000 for a $100,000 limit | An employee diverting deposit or trust funds | Losses the company never reported, funds held outside the trust account |
| Cyber liability | $800 to $3,500 for a $1M limit | Tenant data exposure, notification costs, business email compromise | Pre-existing breaches, and unencrypted records in some forms |
| Workers' compensation | $1.50 to $8.00 per $100 of payroll, by state and class code | A maintenance tech injured on site | Contractors who carry their own coverage |
Two patterns sit in that table. E&O is where the money goes, because screening, maintenance response and owner disputes are the claims that reach court.
Crime and cyber cost little against what they cover. A company that skips them is usually skipping them for reasons other than price.
General liability is the policy a new company buys first and understands last. It follows the premises, not the advice. If the company screens an applicant and the applicant alleges discrimination, the general liability carrier will deny the tender and point to the E&O policy.
An umbrella above the general liability limit commonly adds $500 to $1,500 a year for the first $1M of extra limit. It answers a serious injury claim once the primary limit is gone.
Workers' compensation is priced per $100 of payroll, by class code, so a leasing office and a maintenance crew price differently. North Dakota, Ohio, Washington and Wyoming run monopolistic state funds for most employers, and the coverage there is bought from the state. Elsewhere it comes from a private carrier.
How a broker builds the E&O number
E&O is rated on unit count, not revenue. A broker takes the units under management, the average rent, the state and the claims history, then applies a rate per unit.
E&O rating factors
- $5,000deductible cuts premium 10-15%
- 2xpremium after one paid claim
- $1M to $2Mlimit adds 25-40%
- $300,000defense bill erodes $1M limit
For a company with no claims, the arithmetic is units times a base rate per unit, adjusted for state and for the deductible. A $5,000 deductible instead of $2,500 might cut the premium by 10 to 15 percent.
A single paid claim in the last five years can double the premium. Two claims can make the company hard to place at any price.
The limit matters more than the premium difference between limits. Moving from $1M to $2M often adds 25 to 40 percent to the E&O premium, a smaller jump than most managers expect.
Defense costs usually erode the limit. A $1M policy with a $300,000 defense bill leaves $700,000 for the claim itself. Ask the broker whether defense sits inside or outside the limit before comparing two quotes.
The management agreement carries half the cost
The company can move a large share of its exposure onto the owner by contract, if the management agreement is drafted for it. Provisions to discuss with the attorney and the broker:
The management agreement
- The owner carries property and general liability insurance on the building, at limits the company sets as a minimum, and names the company as an additional insured.
- The owner provides a certificate of insurance before the company takes over the building, and again at every renewal.
- The company is not responsible for insuring the building, only for verifying the certificate, unless the agreement expressly says otherwise.
- The company's own liability to the owner is capped at a figure the attorney confirms is enforceable in that state.
An owner who will not carry insurance, or will not name the company, is telling the company something about how the relationship will go.
Questions to put to the broker
A broker who works with management companies has heard all of these. A broker who has not is the wrong broker.
- Does the E&O policy cover fair-housing and discrimination claims, and does it cover claims brought by clients as well as by third parties?
- Does the crime policy cover theft of client funds held in trust, or only the company's own money?
- Does the cyber policy respond to a business email compromise loss, where the company was tricked into sending owner funds to the wrong account?
- Which employees, contractors and resident managers are covered under workers' compensation, and what does the state require for the rest?
- Are staff who drive personal vehicles to showings covered, and under which policy?
- What is excluded? Ask for the exclusions in writing and read them.
Where the exposures come from
Insurance responds to claims; the operation decides how many claims there are. Three sources dominate in this trade.
Screening. A written screening standard applied to everyone, checked against HUD's fair-housing obligations and the state or city agency's added protections, is the control. Training records prove it was followed. The licensing walk-through explains why the fair-housing duty starts before the first tenant.
Premises. The leasing office and the common areas are where injuries happen. OSHA's safety and health program guidance covers staff hazards, and the Justice Department's ADA small-business guide covers the office as a public accommodation.
An office location chosen with an accessible route and a well-lit parking area removes a class of claims before they exist, and the site-selection checklist treats access as a decision criterion rather than an afterthought.
Money. Separate accounts, monthly reconciliation by one person and review by another, and two signatures on any disbursement above a threshold the company sets. Crime coverage is the backstop, not the control.
Reading the market for comparison
Larger companies publish little about their insurance, but the disputes that reach court are public. Reading a few decisions involving companies of the kind profiled here shows which allegations recur: screening, deposits and maintenance response. That is the order in which to buy coverage and the order in which to build controls.
Common questions
How much does E&O cost for a small management company?
A firm managing 150 units with a clean claims history commonly pays $2,500 to $6,000 a year for a $1M limit. At 1,000 units the same policy runs $10,000 to $25,000. State, deductible and claims history move the number more than unit count does.
Is general liability enough for a property manager?
No. It covers injuries on premises the company maintains and almost nothing else this trade is sued for. Screening complaints, missed maintenance and owner disputes are E&O claims. Theft of trust funds is a crime claim.
Does cyber coverage matter for a small company?
The company holds bank details for every owner and personal data for every tenant, and it sends money on instruction by email. A $1M cyber policy commonly costs $800 to $3,500 a year, which is less than one fraudulent wire.
Who insures the building?
The owner. The company's job is to require it in the agreement, verify the certificate, and make sure the company is named as an additional insured. A company that insures owners' buildings itself has taken on a different business.
Which carriers write property management coverage?
Philadelphia Insurance Companies, CNA, The Hartford, Travelers and Chubb sell general liability, E&O or management liability to real estate managers. A broker places the account with whichever of them prices the risk. The quote, not the brand, decides.
