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 your insurance company would typically be the primary defendant in the case. It is likely that your property manager, LLC and/or Trust would also be named as co-defendants given the standard legal process.
Your insurance company would defend you personally but without the required coverage, the property manager’s insurance would 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. Your Trust or LLC may not be covered at all exposing you to even further financial risk.
This requirement is for your protection so you do not inadvertantly end up incurring the cost of defending your managment company. This situation can be easily avoided by having the necessary coverage in place.
It is 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.