A woman who was assaulted in her apartment after a stranger broke in through the unit’s back sliding door is suing the housing complex for over $1 million, claiming the attack could have been prevented if the broken back door lock had been fixed when she and her roommate first reported it. The Austin, Texas, woman filed the lawsuit against the building’s property management company as well as its owners after the December 2022 incident, the Austin-American Statesman reported on April 24.
According to the lawsuit, the roommates had asked about a security bar for the door until the lock was fixed, but they were told they had to purchase it on their own, which is a violation of state law, the publication reported.
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“These tragic stories really stand out because of how easily preventable they were,” said Cooper Veazey, Senior Underwriter, Commercial Insurance, Burns & Wilcox, Oxford, Mississippi. “They likely could have been avoided altogether had the apartment owners done their due diligence. The steps that could have been taken are common sense.”
In both instances, coverage for legal expenses, settlements and more could be included under an apartment complex’s Commercial General Liability (CGL) Insurance or the property manager’s Errors & Omissions (E&O) Insurance, said Erica Rangel, Manager, Professional Liability, Burns & Wilcox, Chicago, Illinois.
These tragic stories really stand out because of how easily preventable they were … The steps that could have been taken are common sense.
“These are some very extreme examples, so it is not something that we see very often, but it does happen,” Rangel said. “A property manager is responsible for the oversight and maintenance of the property, including making sure that the property is safe and up to code. If their failure to provide these services results in a bodily injury or property damage claim, that could be covered under an E&O Insurance policy.”
Assaults, slip-and-falls among common apartment complex lawsuits
In February, the family of a 21-year-old man who was killed in a shooting at an apartment complex in Washington, D.C., in March of 2023 filed a $25 million wrongful-death lawsuit against the property owner and management company, claiming they failed to provide adequate security, the Washington Post reported. The man was shot outside the courtyard area of the complex when he tried to break up a fight, and an on-site security officer allegedly failed to intervene or call 911 after the incident, according to the publication.
A property manager is responsible for the oversight and maintenance of the property, including making sure that the property is safe and up to code.
“Anytime you have a fatality, you can expect the policy limits to pay out,” Veazey said of potential coverage for this type of lawsuit under an apartment owner’s CGL Insurance. “The fatality part of any claim certainly increases it to potentially exhaust all limits, on both primary CGL Insurance and their Excess Liability Insurance.”
Excess Liability Insurance provides additional liability limits above and beyond the standard limits offered on a CGL Insurance policy. Although such severe claims are less frequent, with more common apartment complex claims consisting of slip-and-fall injuries, apartment owners are generally encouraged to carry both policies, he said.
“It is always a good recommendation to any policyholder to obtain both a CGL Insurance policy and Excess Liability Insurance to go over that — because you just never know,” Veazey said. “If you have three or four slip-and-fall claims, you could really start diminishing your limits over the course of a year, so the Excess Liability Insurance just provides a precautionary cushion.”
It is always a good recommendation to any policyholder to obtain both a CGL Insurance policy and Excess Liability Insurance to go over that — because you just never know.
Slip-and-fall injuries are among the most common claims against apartment complex owners, Rangel said, as well as other types of injuries that occur on the premises. In July of 2023, a lawsuit was filed against the owners of an apartment complex in Birmingham, Alabama, after a deck leading to their front door collapsed underneath them, injuring two individuals, WBRC reported at the time. According to the Philly Voice, a jury verdict of $350,000 was reached in November of 2023 after a tenant slipped and fell on a defective stair at her apartment complex, fracturing her ankle and requiring two surgeries.
“Things like this happen all the time, unfortunately, and that is why we insure a lot of property managers,” Rangel said.
Protecting against professional mistakes
In British Columbia, Canada, 17 separate lawsuits have been filed in relation to a May 2022 condo complex fire that displaced 160 residents, CBC News reported May 8. The lawsuits, filed by 19 former renters, name unit owners as well as the building’s property management company, claiming steps were not taken to keep residents safe and that the management company failed to inspect alleged fire hazards and maintain fire safety systems.
While CGL Insurance can respond to claims of on-site bodily injuries and property damage, E&O Insurance is an important policy for apartment property managers in the event an incident was caused by a professional error.
“Our E&O Insurance policy can extend to some bodily injury and property damages when that is a result of the professional services being rendered,” Rangel explained. “If the property manager failed to put proper smoke detectors in the building, that may become a property management claim because they failed to upkeep the property and keep it up to code.”
In many cases, “both policies could be triggered,” she added. In situations where the property owner self-manages their properties, “we can cover the owner for the management of their own properties as well,” she said.
I do not think most property managers understand their exposure from an errors and omissions standpoint.
However, property managers frequently underestimate their need for E&O Insurance, according to Rangel. “I do not think most property managers understand their exposure from an errors and omissions standpoint,” she said, noting that the policy can extend to a “multitude of things” including third-party financial loss, a property manager’s failure to disclose mold or other information, and third-party discrimination. “If they are in charge of finding tenants for the building and somebody alleges they were not picked for the apartment because of their race, for example, that could be a third-party discrimination claim.”
Insurance coverage for assault may be difficult to obtain
In March, the family of a physician who was fatally stabbed at an apartment complex in Texas filed a lawsuit against the complex, claiming a security checkpoint was unmanned, the gates were left open and an electronic entry keypad was malfunctioning, Fox 26 Houston reported. In February, two individuals were killed and another was injured after a stabbing at an apartment building west of Montreal, Quebec, according to CTV News.
Crime is a serious concern for apartment complex owners and managers, but insurance coverage for assaults is increasingly difficult to obtain, particularly in areas with higher rates of crime, Veazey said.
“It is becoming more and more difficult to get assault and battery coverage on a policy,” he explained, which is a result of both the frequency and severity of assault and battery claims. “Those carriers that do offer it are typically only offering a sublimit. If the broker is unable to provide assault and battery coverage or a sublimit, that needs to be communicated and that building owner needs to understand they do not have coverage and should take other security measures.”
When a certain type of coverage is more challenging to obtain, the value of working with a knowledgeable insurance broker becomes clear, Veazey said, recommending owners and managers make sure they are working with a broker who understands their needs and business beyond a transactional relationship. “This is where the good brokers separate themselves,” Veazey said. The same goes for discussing deductibles, which can “be anywhere from zero to as high as $10,000 or more,” he said. “It is definitely a discussion you want to have with your broker.”
Property management companies should also discuss any other services they offer with their broker. According to Rangel, many management companies are operating as “a one-stop shop” for property management, real estate, sales, construction management and more. “We are seeing a lot of firms providing a lot of different services,” she said. “It is important to know what that property management firm is actually doing to make sure they get the proper insurance coverage for it.”
Apartment complex owners and property managers should know that many incidents “can be avoided upfront” by taking simple security measures to promote a safe environment. This may include lighting, fencing, and hiring security. “These cost money, obviously, but it could save a lot more money down the road by avoiding a serious claim,” Veazey said.
Smoke detectors and fire safety systems should be maintained and checked regularly, and these actions should be carefully documented. “Be diligent and document it,” he emphasized. Still, even if smoke alarms are functioning properly, apartment complex owners may be sued in the event of a fire-related fatality, for example. “You are still going to have attorneys involved,” he said. “That is just a worst-case scenario and why you need to have insurance anyway.”
