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The Role of Management Agreements in Property Owners’ Risk Management Strategy

By April 15, 2021Insurance

Written by Peter Normand, Webber and Grinnell Commercial Lines Account Executive and RiSC Consultant

Are you utilizing a property management company to manage your portfolio? Or, is this something you are considering? Are you a Property Manager who hasn’t reviewed your agreement in some time? Whatever the case, it’s critical to understand the management agreement you have in place. It is an essential piece of your risk management strategy, and serves as a conduit for risk transfer for parties on both sides of the agreement.


A management agreement should clearly define the manager’s roles and responsibilities. This should include what services you have agreed on and the fees, as well as additional services not included in the contract and the fees associated with those, and services that the management company will not do. It is especially important that there be language stating that the manager supports Equal Opportunity Housing. Conversely, the management agreement also defines the obligations and responsibilities of the property owner. The types and limits of insurance of both parties should be spelled out clearly in the agreement.


By defining which party has what responsibilities, a contract with clear risk transfer is established. This portion of the contract establishes who holds specific liabilities. It also limits parties’ liabilities. Language to be on the lookout for are Hold Harmless (for the management company) and Reasonable Care (for the property owner). To help ease the worry about whose policy will pick up coverage or concern that a property manager doesn’t have specific coverage, certain Property and Liability policies that the landlord can purchase pick up automatic coverage for the management company, which is an important coverage.


As an agency, we want to make sure that your interests are well protected. We also understand that these details can feel overwhelming and cumbersome alongside your day-to-day responsibilities. That’s why we’re here. I would be happy to assess the agreements you’re currently using and provide feedback. Please call me at 413-570-1964 or email at anytime. It’s who we are. It’s what we do.