Property management can be a lucrative industry. It allows you to maintain, market, show, and rent properties for owners without having to own real estate yourself. Depending on your goals, a property management firm can be almost any size, from a sole proprietorship where you wear all the hats yourself, to a large firm.
What doesn’t change, however, is the need for workers’ compensation for property managers. Why do property managers need workers’ comp insurance? It’s all about protecting yourself, your employees (if applicable), and your business.
Purchasing workers’ compensation for property managers is just the smart thing to do. But what if you operate a business that doesn’t have any employees and it’s located in a state that doesn’t require workers’ compensation for businesses under a certain size? Even then, it’s a wise decision.
Let’s look at an example.
You own a property management business, but you’re the sole employee. You handle client communications, showing properties, arranging for maintenance, and everything else. One day, you’re leaving the office to go show a client’s property when you trip and fall down the stairs, breaking your leg in the process.
What insurance will cover this situation? If you think your health insurance will take care of you, you’re in for disappointment. Will it be your general liability insurance? Unfortunately, it won't cover anything in this case, as almost every GL policy excludes injuries to employees and employers.
Workers’ compensation for property managers is the only type of coverage that will pay for your medical costs and cover your lost wages.
Workers’ compensation coverage does just what the name implies – it compensates employees injured on the job or who develop work-related diseases. This can range from things like the medical costs associated with a slip-and-fall injury to dealing with lifelong carpal tunnel due to work duties.
Worker’s compensation pays for three things – medical costs, lost wages, and death benefits. It also prevents your business from being on the hook if an employee is injured and decides to sue, like court costs, attorney fees, settlements, and witness fees.
Workers’ compensation pays for immediate, short, and long-term medical costs related to a workplace injury or accident. For instance, if an employee trips over frayed carpeting in the office, falls, and sprains their ankle, workers’ compensation would pay for the doctor's visit, X-rays, pain medication, and more. It will also pay for things like physical therapy that might go on for years after an injury.
If an employee is injured and cannot work, they cannot earn money to meet their financial responsibilities. Workers’ compensation will pay a percentage of their regular earnings (usually around two-thirds) to help them make ends meet. Most states stipulate the percentage as well as how long the employee must be out of work before this benefit kicks in.
If an employee is killed on the job or dies due to a workplace injury, workers’ compensation will pay death benefits to their survivors. Spouses and dependent children will receive a percentage of the employee’s average earnings for a specific time after their death. The insurance will also cover part of the funeral costs. Note that all amounts are state-specific.
Most property managers don’t have their own maintenance and construction crews. They work with local contractors to handle things like mowing the lawn, repainting homes, or repairing interior damage when a tenant moves out on behalf of their clients.
So, are you on the hook for workers’ compensation for these contractors? In a word, no. At least if they are truly contractors and not employees. Not sure what the difference is? Here’s a quick guide to determining whether you’re using contractors or employing people:
Contractors are independent business owners who work with you to perform a specific duty. In most cases, you are just one of their clients.
And here’s the thing – as business owners, they’re required to provide their own worker’s compensation insurance. It’s considered best practice to require proof of insurance before working with any contractor. That goes beyond workers’ comp, though. They should also carry general liability insurance and other types of coverage so that you’re not on the hook if something goes wrong during the job.
There’s no hard and fast rule regarding the cost of workers’ comp insurance. Quite a few factors play a role, and you’ll need to balance those when you shop around for property management insurance quotes. Some of the factors to consider are:
Your state will also play a role in the property management insurance requirements you must meet in terms of coverage. For instance, some states require every employee in your business to be covered, including part-time workers. However, other states only require you to cover full-time employees or stipulate that you don’t have to purchase coverage until you’ve hired four or five employees.
If you’re located in North Dakota, Wyoming, Washington, or Ohio, you’ll also have to purchase workers’ compensation from the state fund. These four states do not allow you to shop around (although the actual insurance bought through the fund is still provided by private insurers).
Looking for ways to save money when comparing quotes from property management insurance companies? Here are some of the most effective ways to reduce your costs:
Create a Drug-Free Workplace – Drug and alcohol use are responsible for over 60% of all workplace accidents each year. By creating and enforcing a drug-free workplace policy, you help protect your employees and reduce your risk level.
Safety is critical – The cost of workers’ compensation comes down to risk. You can reduce your risk by focusing on safety throughout your business. For instance, you can create an employee-led safety committee. You should hold safety training events throughout the year. You should also make sure OSHA’s requirements are followed.
Offer employees a return-to-work Program – Too often, employees injured on the job languish at home, unemployed, while waiting for a full recovery. This slows their healing. Instead, create a return-to-work program that allows them to come back to work with lighter duties.
Keep things in good shape – Regularly inspect your office for signs of wear and tear or potentially dangerous situations, like worn carpeting, loose floor tiles, etc. Repair these items immediately to help reduce the chance of incidents.
Check Employee Classifications – Your employee’s job codes play a big role in the cost of your insurance. Make sure they’re all classified correctly to help avoid overpaying.
Focus on your Ex-Mod – Your Experience Modification rate is based on the number of workers’ comp claims you’ve had. By creating a safer workplace, you can reduce the number of claims and then watch as your Ex-Mod changes, leading to lower rates.
Finding workers’ compensation insurance may be easier said than done. It involves more than just submitting a property manager insurance application with your current general liability carrier. You may find that your insurer doesn’t even offer workers’ compensation coverage or that they don’t want to take on the risk your business represents.
It's a frustrating situation being caught in the middle, but there’s hope. At Kickstand Insurance, we work with property managers and property management firms across the country. For most of our clients, workers’ compensation is mandatory, but even if you’re a sole proprietor, buying coverage is a wise investment against an uncertain future.
Getting the coverage you need takes very little time. Just complete our brief form (it takes about five minutes) and you’re on your way. We’ll send you an instant quote, as well as connect you with one of our insurance specialists. They’ll work with you to customize your coverage and fine-tune everything (including making sure those job class codes are accurate).
Our goal is simple – to provide you with the insurance you need for peace of mind. Get started today.