A landlord's property management firm wants to be added as an additional insured to the landlord's DP3 policy. However, the carrier requires that the property manager is listed on the deed. The property manager is insistent that it be added as an additional insured and is requiring it as part of the property management contract. 

Q: Can the property manager require additional insured status as part of the contract? Should the carrier add it to the landlord's DP3?

Response 1: First off, the property manager can require anything they want in a contract. The insured does not have to sign it and is free to find a new property manager.

However, property managers are routinely added as additional insureds. The commercial general liability policy automatically includes real estate managers as additional insureds in the "Who is an Insured" section of the policy. I have often dealt with management companies for hotels and condo associations and they are consistently added as additional insureds.

How far up the chain at the carrier did you go? The first-line underwriters may not know that.

Response 2: Is the property manager asking to be included in the property section or are they asking to be an additional insured on the liability coverage that might be combined with the DP3 property form?

If they're requesting to be added to the property section, that would be unreasonable, since the property manager does not have an insurable interest in the property. If the property manager requests a waiver of subrogation, it might be reasonable to add it to the property section to avoid the insurer making a claim against the property manager for damage to the property.

Property managers typically require status as an additional insured on the fee owner's liability policy. It is a common request since the property manager is considered the legal agent of the fee owner.

Response 3: The property manager can require additional insured status in its contract—and most do. It is a perfectly reasonable request for a property manager to make. After all, if your client did something as the owner of the property that created a liability loss to a third party, it's likely that the property manager would be named in that suit, even if they weren't responsible. They are seeking additional insured status to get protection from your client's policy in case something like that happens.

It's unusual for a carrier to refuse this request. You may need to escalate it to an underwriting manager and see if they can accommodate you. If they can't, you might look at other personal lines carriers or you might consider writing the home on a commercial policy. Commercial carriers wouldn't have any concerns with this request.

Response 4: Get a copy of the contractual language that requires additional insured status and give it to the insurance company, along with a copy of the request for that status. If the company won't do it, ask for a written rejection and give it to the property manager and explain the situation to your client. 

If additional insured status is still required, you need to search for an insurer who will do it. If you can't find one, you need to explain that to your client and back away from the account.

Response 5: Is the additional insured status requirement for property, liability or both? Property additional insured status may require proof of insurable interest—such as ownership, contract or legal liability—but liability additional insured status may be a contract requirement under the property management contract.

If the carrier is stating that to be an insured under the liability policy, the property manager's name must be on the deed, I respectfully disagree. You should probably look for another carrier that will provide the services your client needs.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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