Who’s on First? Insurance Structuring, Liability, and the Importance of a Strong Property Management Agreement

Executive Summary:

A recent Tennessee Court of Appeals decision requiring two insurers to share defense costs in a premises liability suit highlights the risks of unclear insurance requirements in property management relationships. This case illustrates how vague "other insurance" clauses and incomplete management agreements can trigger litigation, delay claims handling, and create financial exposure for both property owners and managers. This whitepaper outlines the legal issues involved, explains liability standards in property management, and emphasizes the importance of selecting qualified managers and using precise contract language.

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I. Legal Context and Case Summary

In HG Jones, LLC v. Jordan Howell, a guest of a tenant fell down the front steps of a leased home. The injured party sued both the property owner and the property manager. Each party was insured separately: Howell, the owner, had a dwelling policy with Cincinnati Insurance; HG Jones, the manager, had a general liability policy with Auto-Owners.

Each policy included an "other insurance" clause that sought to defer primary responsibility to the other policy. The property management agreement required the owner to maintain liability insurance and to protect the manager "in the same manner and extent as the Owner," but did not require that coverage be primary and non-contributory.

Initially, the trial court held Cincinnati responsible for providing the defense. However, on appeal, the Tennessee Court of Appeals ruled that the two “other insurance” clauses were mutually repugnant. The court found both insurers had to share defense costs.¹

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II. Clarifying the Standard for Negligence in Property Management

There is often a misunderstanding among property owners that property managers are automatically responsible for any injury that occurs on a managed property. In reality, a manager is only liable if the injury is caused by gross negligence, such as knowingly failing to correct a dangerous condition or violating basic standards of care.

Most slip-and-fall cases fall under the owner’s responsibility unless there is evidence that the manager directly caused the hazard or willfully ignored it. When agreements and insurance programs are not drafted to reflect this allocation of risk, disputes between owners, managers, and insurers are more likely.

III. How Better Contracts and Insurance Structure Could Have Avoided the Dispute

The dispute in HG Jones could likely have been avoided with more precise contract terms. Specifically:

• The management agreement should have required the owner to list the manager as an additional insured by endorsement
• It should have stated that the owner’s policy must apply on a primary and non-contributory basis
• The insurance brokers and legal counsel for both parties should have reviewed both policies and agreements together to avoid conflicting terms

These simple but critical steps can help ensure that insurers understand the risk they are assuming, and that parties avoid unnecessary legal expense when a claim arises.

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IV. Why Property Manager Selection Matters Beyond Legal Risk

Hiring a competent property manager does more than reduce liability risk. A strong manager improves property performance through tenant retention, operational efficiency, compliance with local ordinances, and early detection of maintenance issues.

Properties with high-performing managers often experience fewer claims and better outcomes in litigation. A manager who documents inspections, communicates with tenants, and has established safety protocols is far less likely to be found negligent in a personal injury case.

Attributes of an effective property manager include:

• Demonstrated experience with similar property types
• Documented inspection and maintenance processes
• Clear understanding of legal and insurance obligations
• Responsiveness and proactive communication with ownership

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V. Recommendations for Owners and Investors

1.       Update Property Management Agreements
Require that the property manager is listed as an additional insured on the owner’s policy, with primary and non-contributory status.

2. Align Legal and Insurance Teams
       Have contracts reviewed jointly by your attorney and insurance broker to eliminate gaps between the written agreement and the policy terms.
3. Request and Verify Certificates and Endorsements
       Annual insurance renewals are an ideal time to confirm that the manager is still properly listed and that policy terms match the contract.
4. Educate Ownership Groups
       Ensure that owners understand when liability is theirs versus when it may fall to the manager. Set expectations accordingly.
5. Invest in Property Manager Quality
       Hiring based on cost alone may save money upfront but create higher exposure over time. Reputation, references, and operational rigor matter.

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VI. Conclusion

The HG Jones case is a clear example of what can go wrong when insurance coordination and contractual clarity are overlooked. It also reinforces the broader importance of high-quality property management as a tool for risk reduction and asset protection. Owners and investors should view risk management as a combination of legal structure, insurance strategy, and people. Getting all three right is critical for long-term success.

Footnotes

1.        Tennessee Court of Appeals, HG Jones, LLC v. Jordan Howell et al., Opinion filed May 21, 2025.

2.        Restatement (Second) of Torts § 500; see also Bynum v. St. Louis Housing Authority, 410 S.W.3d 854 (Mo. Ct. App.2013).

3.        IRMI (International Risk Management Institute), "Other Insurance Clause," IRMI Glossary.

4.       Institute of Real Estate Management(IREM), Best Practices for Residential Property Management, 2023 Edition.

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