In the unfortunate event that a tenant, vendor, guest, or anyone else has reason to file a lawsuit related to your property, and the primary cause is attributed more to the property or the property owner than to the property management services, you and your insurance company would typically be the primary defendants. It is likely that your property manager would also be named as a defendant, given the standard legal process. Your insurance company would defend you but without the required coverage, the property manager’s insurance company would then have to defend them or pay any claims on their behalf. Subsequently, your property manager’s insurance company would pursue you to recover their costs.
This requirement is for your protection as your property manager has the correct insurance and would not bear the burden of the cost of the lawsuit, you would. This situation can be easily avoided by having the necessary coverage in place. Any property management company that does not have this requirement simply does not understand how lawsuits work.
It's worth noting that Holland Properties’ insurance policy provides reverse coverage to protect the property owner in case we become the primary defendant in a lawsuit and you as the property owner are also named in the suit.
