Sued as the Property Manager: Whose Policy Answers?

If you manage a shopping center in Sarasota or Bradenton, or you own one and pay somebody to manage it, there is a clause in the general liability insurance policy that decides who defends you when a tenant's employee gets hurt. A New Jersey appeals court showed exactly how it works. An employee of a tenant slipped on ice at a commercial property in Bergen County and sued the owner. Then he amended the complaint and added the owner's property manager, Simotas Property Management. The manager was not on the tenant's liability policy, not as a named insured and not as an additional insured. It asked the court for coverage anyway under the clause every manager has heard of, the "real estate manager" clause. On June 10, 2019, the Appellate Division said no. The manager was the owner's manager, not the tenant's, and the tenant's policy owed it nothing.

I bring this up because that clause sits in the standard general liability form on nearly every commercial policy in Florida. It is the reason a property manager often has coverage it never paid for. It is also the reason that coverage stops exactly where most managers assume it keeps going, and it never reaches the claim an owner is most likely to bring against a manager in the first place.

The clause everyone leans on

The tenant's policy, issued by Sentinel Insurance Company, said this under Who Is An Insured: "Each of the following is also an insured: ... Real Estate Manager. Any person (other than your 'employee' or 'volunteer worker'), or any organization while acting as your real estate manager." The policy also defined the word that mattered: "Throughout this policy the words 'you' and 'your' refer to the named insured in the Declarations."

The named insured was the tenant. So the only question was whether Simotas was the tenant's real estate manager. It was not. It managed for the owner under a property management agreement covering tenant screening, leases, and evictions in the owner's name. The lease made the tenant keep the walkway clear of ice, but it did not require the tenant to insure the owner or the manager, and no written agreement required the tenant to procure insurance for Simotas at all. The court's last word: "Simotas is not entitled to the benefit of coverage under a policy that it was not a party to." The opinion is Diaz v. Chrys S. Norwood Family, LP.

The strip mall case it rests on

Diaz applied a published 2012 decision about a strip mall parking lot, Cambria v. Two JFK Blvd., LLC, and the facts should sound familiar to any plaza owner. John Cambria slipped on ice in the lot. The landlord and its manager, David Rubin, asked to be covered under a tenant's Harleysville policy. The lease required the tenant to name the landlord as an additional insured. The motion judge found the tenant never did. The trial court then held Rubin was covered anyway as a real estate manager, and the Appellate Division reversed.

Rubin was "hired to maintain the strip mall's records, collect the rents, and care for and maintain the property." That made him the landlord's manager. The leased premises did not include the lot, and "the landlord retained the sole responsibility for maintaining and caring for the parking lot." The court concluded "that neither the landlord nor Rubin acted as the tenant's real estate manager" and sent the case back with judgment for the insurer. Whether the tenant breached the lease by skipping the endorsement was left for another day. The certificate the landlord should have chased down was the whole case.

I managed shopping centers before I sold insurance, and this is the part I would tell my younger self: the insurance paragraph in the lease is worth nothing until the endorsement actually shows up on the tenant's policy. A signed lease and an ACORD certificate are not the endorsement.

Three policies, and what each one does for the manager

• The owner's policy. Under the same clause, the manager is an insured on the owner's policy automatically, as the owner's real estate manager, for injury and property damage claims that come out of managing that property. It is only as good as the owner's limits and the owner's renewal. When the owner's carrier walks, which I wrote about in the 45-day letter, the manager's free seat walks with it.
• The tenant's policy. The manager is covered only if the lease says in writing that the tenant must add the owner and the manager as additional insureds, and the tenant's carrier actually issues the endorsement. The Sentinel policy said so in its own terms: additional insureds are added "when you have agreed, in a written contract, written agreement or because of a permit ... that such person or organization be added as an additional insured on your policy." No written agreement, no coverage.
• The manager's own policy. The endorsement carriers commonly attach to a manager's general liability policy is CG 22 70, Real Estate Property Managed. It changes what the policy says about damage to the property you manage, and whose policy pays first for liability that comes from managing property for others. If it is on your forms schedule, read it before you tell an owner you are covered.

The claim none of the three pays

All three are general liability policies. They respond to bodily injury, property damage, and personal and advertising injury, and the Diaz policy says so in those words. Now look at what an owner actually sues a manager for. The renewal option notice that went out late and cost the owner a tenant. The CAM reconciliation that undercharged for three years. The tenant certificate that lapsed, so the owner's carrier paid for a fire that belonged on the tenant's policy. The landscaper with no workers comp. Nobody got hurt in any of those. The owner lost money and wants it back from the manager. That is a professional liability claim, errors and omissions, and no general liability form answers it.

Florida already treats leasing for others as a profession. The license law, section 475.01(1)(a), defines a broker as a person who, "for another, and for a compensation or valuable consideration," among other things "rents, or offers, attempts or agrees to ... negotiate the sale, exchange, purchase, or rental" of real property. Carriers treat management the same way, as a professional service with its own policy.

What goes in the management agreement and the lease

• Management agreement: the owner carries general liability, keeps it in force, and names the manager as an additional insured by endorsement, not just by the automatic clause. If the owner's carrier non-renews, the manager hears the same day.
• Every lease: the tenant names the owner and the manager as additional insureds, in writing, and the manager collects the endorsement page, not only the certificate. The December system is in tenant certificate tracking.
• The lease map: who owns the parking lot, sidewalks, and common areas is written down. Cambria turned on one question, who was responsible for the lot where the man fell.
• The manager's own account: a general liability policy with CG 22 70 understood, and a professional liability policy sized to the rent roll the manager administers.

I write both the general liability and the professional liability side for managers, and the owner's policy on the strip center side. One agent seeing all three keeps them from pointing at each other after a claim.

Sources

• Diaz v. Chrys S. Norwood Family, LP, No. A-5013-17T3 (N.J. Super. Ct. App. Div. June 10, 2019), unpublished.
• Cambria v. Two JFK Blvd., LLC, 423 N.J. Super. 499 (App. Div. Jan. 5, 2012), published.
• Florida Statutes section 475.01(1)(a), 2025.
• ISO form CG 22 70 04 13, Real Estate Property Managed, form summary.

New Jersey decisions do not bind a Florida court. They are cited because the clause they construe is the standard one and the facts are a plaza owner's facts. General information, not legal advice. Coverage depends on the forms on your policy.

The point

A property manager rides on the owner's policy for injuries, rides on the tenant's policy only when the lease and the endorsement both say so, and rides on nothing at all for the mistakes an owner is most likely to sue over. Two of those are fixed with paper the manager controls. The third is a policy the manager has to buy.

Coverage descriptions are general. Actual coverage is governed by the terms, conditions, and exclusions of the issued policy. Availability varies by carrier and by state.