Don’t Go There
Another common professional-liability situation occurs when a property manager creates accounting errors, purposely or accidentally. These errors might involve vendors, collections from tenants or anything internal.
For example, if an onsite manager failed to charge the correct rental rates for a number of units for many months, the owner of the property could potentially sue the property manager for loss of income due to negligence. Many times, accounting errors by a manager can also lead to misallocation of funds from one owner’s property to a different owner’s property, or even potential tax burdens that could be caught during an audit.
Additionally, managers should always hire vendors who hold a valid contractor license and provide proof of current general-liability and workers’-compensation insurance. If services are provided by a contractor without all of the above, the property manager could potentially be liable if a tenant is injured on the premises due to poor workmanship.
Many property managers overlook the importance of professional-liability insurance and, maybe even worse, self-storage owners don’t realize the importance of checking to see if their property managers carry adequate coverage. This is a larger liability exposure than most think because one claim can wipe out your business entirely.
If you’re a property manager or consultant providing professional service or advice, research and purchase a professional-liability policy to insure you against the exposures you carry. Today’s policies are reasonably priced, and the premium basis normally comes from your gross revenues for specific services. It’s an investment worth making to avoid reckless exposure and devastating business losses.
Mike Gong is a property-and-casualty insurance professional for Arthur J. Gallagher & Co., which has provided a full range of insurance solutions to the self-storage industry since 1990. For more information regarding professional liability or any other insurance-related products, call 800.568.0833; e-mail firstname.lastname@example.org.