In today’s episode, we’re going to be delving into three common mistakes that we see property managers make when reviewing COIs.

The first mistake that we’re going to touch upon is not knowing the difference between an Endorsement and a Provision.

If a Waiver of Subrogation Endorsement is required, for example, we are NOT looking at the COI to see if there’s a Waiver of Subrogation there.

An Endorsement has to be a separate page. It is NOT on the COI. So even if the checkbox for Waiver of Subrogation is checked, even if the Description of Operations has something about a Waiver of Subrogation, an Endorsement is required. That’s why we’re looking for a separate page.

The same goes for any other kind of Endorsement. That’s required. Just noting something on the COI is not enough—we need to see a SEPARATE endorsement.

Another common mistake that property managers make is not knowing the difference between Employer’s Liability and Workers’ Compensation limits.

Workers’ Compensation comes with a Workers’ Compensation component and an Employer’s Liability component. Both with separate limits. They cannot be used interchangeably as the words refer to different limits.

Workers’ Compensation is a no-fault line of insurance, meaning it covers accidents regardless of who is at fault. If anyone is at fault at all, regardless, no questions asked it will cover employees’ lost wages and medical expenses caused by an accident.

Employer’s Liability, on the other hand, is fault dependent. That means that in order for the Employer’s Liability to pay out, some form of liability must be proven on behalf of the property manager or landlord that their action or inaction contributed to an accident.

Then Employer’s Liability will cover the cost of a lawsuit and the legal fees. As you can see, these two types of insurance serve different purposes, and they also have different limits. If we take a look at a COI, we’re going to see three limits in the Workers’ Compensation row that refer only to Employer’s Liability.

Meanwhile, there’s a checkbox for Workers’ Compensation.

This checkbox ensures that Workers’ Compensation limits purchased meet the requirements of the state. That’s why it’s called per statute.

Per statute means that the limits are in compliance with the limits set forth by the state. Insurance requirements will often specify limits that are required

for Employer’s Liability, as well as per statute limits, or limits in compliance with the state for Workers’ Compensation. Both requirements need to be met. One does not satisfy the other.

The last common mistake that I want to bring up that property managers often make is not knowing the difference between Property Insurance and General Liability’s property component and confusing the two and taking one for the other.

When property insurance is required, no component of a liability policy can be taken as satisfying that requirement.

We are looking for something completely separate from the liability policies. Property insurance is a first-person type of insurance. It covers the Insured’s own property. In this case, the vendor or tenant’s property needs to be covered.

We’re going to know if the proper insurance component of the requirements has been met by finding the word “property insurance” or something relating to the type of property insurance covered on the COI or on a separate COI that’s specifically for property insurance.

No part of the liability policies going to meet this requirement – though insurance brokers will often think that it does.

Liability policies do cover property damage, but they’re covering third-party property damage, AKA property damage to the landlord or the property manager, their property damage would be covered if a vendor tenant accidentally damages it.

But we are ensuring that the vendor and tenants also have first-party property insurance because if their property gets damaged, it could result in a landlord or property manager lawsuit. And that’s what we’re trying to protect against.

We hope you’ve enjoyed our video course.

I’m Alex Kario, Head of Auditing Operations here at Jones—the compliance solution powering the built world. Until next time!