Property management insurance for the owners you answer to.
Professional liability, general liability, crime and cyber coverage for property managers handling tenants, vendors and owners' money.
By Sam Alishahi · CA Insurance License #4348151 · Reviewed November 2026 · How this page is researched
Your owners' policies don't cover your mistakes
Property managers are sued by owners over missed repairs, lapsed insurance and lease errors, and by tenants over habitability, deposits and fair housing. The owner's landlord policy may name you as an additional insured for premises claims, but it won't cover professional mistakes.
Property management in California generally requires a DRE real estate broker license, and managers handle rent and security deposits held in trust. I set up E&O, liability, crime coverage for those funds and cyber for tenant data.
- Professional liabilityClaims that your management errors cost an owner or tenant money.
- General liabilityInjuries and damage at your office and in your operations.
- Crime and fidelityTheft of trust funds by employees, and funds transfer fraud.
- CyberBreaches of tenant applications, bank details and records.
What underwriters will ask
Having these ready means I can go to market on the first call. The quote form asks for the same things, and anything you don’t know yet can wait.
- Portfolio: number of units and property types.
- Services: leasing, maintenance, HOA or commercial management.
- License: DRE license and broker of record.
- Trust funds: typical balances held.
- Staff: employees and payroll.
- History: current policies and claims.
Trust accounts: what a DRE audit checks
Collecting rents or finding tenants for others for pay is broker activity under Business and Professions Code 10131(b), so the Department of Real Estate's trust fund rules apply. DRE's guide (RE 13) says security deposits on units you manage are trust funds, disbursed at the owner's instruction.
- Three business days (Regulation 2832): money you or your salesperson receive for others goes to the owner, a neutral escrow depository, or a trust account in the broker's name as trustee within three business days. Section 10145 requires that account to be at a bank or recognized depository in California.
- Who signs (Section 10145): the broker or broker-officer, or with written authorization a salesperson under the broker, another broker under a written agreement, or an unlicensed employee.
- No commingling (Regulation 2835 and RE 13): your own money in the account is limited to $200 for bank charges, earned management fees can't sit there more than 25 days, and rents and deposits from properties you own aren't trust funds and don't belong there.
- Monthly reconciliation (Regulation 2831.2): at least once a month, except months with no activity, reconcile every owner's separate record against the record of all trust funds received and paid out, and keep a record of each reconciliation.
- Three years (Section 10148): keep trust records, canceled checks and related documents for three years. DRE can examine them after notice, and audit them without further notice when there's sufficient cause.
The insurance piece is written into Section 10145. An unlicensed employee can sign trust checks only if you have fidelity bond or insurance coverage at least equal to the most trust money that employee can reach at any time, protecting you from employee theft, dishonest acts or forgery. The deductible can be up to 5 percent of the coverage amount, with separate evidence, such as a bond or segregated cash, that covers it. I check that limit against your highest balance, not an average month. Outside California, trust account rules vary by state.
Managing HOAs: the 11504 disclosures
HOA management has its own statute. Business and Professions Code 11501 defines a common interest development manager as an individual paid to provide management or financial services to an association, and says that person can't be required to hold a real estate license for that work.
- "Certified" is earned: under section 11502, the route for managers qualifying on or after July 1, 2003 is at least 30 hours of coursework plus a passed exam. The required topics include risk management and insurance coverage.
- Annual disclosures (11504): tell the board whether you're certified, which professional association certified you and when, where your primary office is, and whether you hold an active real estate license.
- Fidelity disclosure (11504): before signing or renewing a contract, tell the board whether your fidelity insurance, or your employer's, covers the association's current-year operating and reserve funds. The statute requires the disclosure; it says it doesn't compel the association to require the coverage.
- Unfair practices (11505): using the "certified" title without meeting 11502, claiming a government agency certifies, registers or licenses you as a certified manager, or skipping the 11504 disclosures.
The fidelity question is the one I focus on. Reserve funds can be larger than anything else you handle, so compare the crime limit with the operating and reserve balances, not just monthly collections. The association's own program is covered on HOA insurance and what insurance an HOA needs.
Property management insurance, answered
Do property managers need E&O insurance?
It isn't required by California law for most managers, but many owners require it in management agreements, and it covers claims that general liability doesn't.
Does E&O cover fair housing claims?
Some property management E&O policies include discrimination and fair housing coverage and some limit it. Check before you need it.
Are tenant security deposits covered if stolen?
Theft of funds by an employee is covered by crime or fidelity coverage, not by E&O or general liability.
Should I be named on the owner's insurance?
Yes. Management agreements commonly require owners to name the manager as an additional insured on their property liability policy.
Does an HOA manager have to carry fidelity insurance in California?
Business and Professions Code 11504 doesn't compel it. It does require the manager to tell the board, before signing or renewing a contract, whether the manager's or employer's fidelity insurance covers the association's current-year operating and reserve funds.
Can a California landlord still charge two months' rent as a security deposit?
Only if the landlord is a natural person, or an LLC whose members are all natural persons, owning no more than two residential rental properties with no more than four units offered for rent in total, and never for a service member (Civil Code 1950.5(c)(5)). Otherwise the limit is one month's rent.
Do you offer property management insurance outside California?
Yes. Clients across the country send the same quote form. Sam Alishahi is licensed in all 50 states and Washington, DC and places policies there directly. The shopping across carriers works the same way. Rules, minimums and markets differ by state — see insurance requirements by state.
Official sources
- Cal. Bus. & Prof. Code 10131 (real estate broker defined)
- Cal. Bus. & Prof. Code 10145 (trust fund handling, fidelity bond or insurance)
- Cal. Bus. & Prof. Code 10148 (record retention and audit)
- 10 CCR 2832, Trust Fund Handling (also 2831.2, 2834, 2835)
- DRE RE 13, Trust Funds: A Guide for Real Estate Brokers and Salespersons
- Cal. Civil Code 1950.5 (security deposits)
- Cal. Bus. & Prof. Code 11501-11505 (common interest development managers)
- Cal. Gov. Code 12955 and 12927 (fair housing)
- 2 CCR 12269, criminal history practices in housing
- IRMI, When Is an Insured Not an Insured?
Tell me about your portfolio. I'll shop it.
Your unit count, services and current policy are enough to start.
Alishahi Insurance · Saman Alishahi, independent insurance broker, California License #4348151. General information, not a quote or a promise of coverage; coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.
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(877) 711-4545Answered 24/7 · CA License #4348151
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