Manager vs. Owner Liability
A fee owner and a third-party property manager are often named as co-defendants in the same premises-liability or wrongful-lockout suit — but their liability posture, their insurance, and their indemnification rights against each other are not the same thing.
This page describes general, standard commercial property-management industry practice — how indemnification, additional-insured status, and liability exposure typically work between a fee owner and a third-party manager. It is not a summary of any specific state's statute or case law, and it is not legal advice. Every management agreement is individually negotiated; the actual allocation of risk between an owner and a manager depends entirely on that agreement's specific language, which should be reviewed by counsel before relying on any of the general patterns below.
For the underlying legal exposure itself — what a claimant must prove, and how it varies by state — see the Premises Liability / Negligence Guide. For lockout-specific exposure, see the Commercial Eviction Handbook.
How it typically flows in a management agreement
Owner indemnifies manager
Standard practice: the owner typically indemnifies the manager for claims arising out of actions the manager took within the scope of its authority and in accordance with the owner's approved budget and instructions — the ordinary cost of doing the job the owner hired the manager to do.
Manager indemnifies owner
The typical carve-out runs the other way: the manager indemnifies the owner for claims arising from the manager's own negligence, willful misconduct, fraud, or actions taken outside the scope of the management agreement — conduct the owner didn't authorize and shouldn't have to bear.
This is the default, commonly negotiated structure — not a rule of law. Some agreements narrow or broaden either side's carve-outs considerably (a cap on the manager's indemnification obligation, a gross-negligence-only standard instead of ordinary negligence, or a mutual defense-cost-sharing provision regardless of fault). Read the actual agreement; don't assume it follows the default pattern.
Additional-insured status: the owner's policy vs. the manager's own policy
The owner's CGL doesn't automatically cover the manager
Simply being hired as manager doesn't make you an insured under the owner's commercial general liability policy. The standard mechanism is an actual endorsement adding the manager as an additional insured — commonly under \"managers or lessors of premises\"-style policy language — typically limited to liability arising from ownership, maintenance, or use of that specific premises. Confirm the endorsement is actually issued in writing; a management agreement that merely says the manager \"will be named additional insured\" without the endorsement itself in hand isn't coverage.
The manager typically carries its own coverage too
Separate from any additional-insured status on the owner's policy, a professional property manager typically maintains its own CGL, plus coverage the owner's policy was never designed to reach: errors-and-omissions / professional liability for claims arising from the manager's performance of management services themselves (as opposed to a physical hazard on the property), and fidelity/crime coverage given the manager's routine handling of tenant funds, security deposits, and rent collections.
It often runs both directions
Just as the manager may be added to the owner's policy, a manager's own agreement sometimes requires naming the owner as an additional insured on the manager's E&O coverage for claims specifically arising from the manager's professional services — worth confirming as part of the same insurance-requirements review, not assuming it's one-directional.
How a manager's exposure differs from an owner's in the same suit
The owner's exposure generally tracks possession and control of the property
Premises-liability duty (the elements-to-prove, visitor-classification, and notice rules covered state-by-state in the Premises Liability Guide) runs to whoever owns or occupies and controls the property — that's typically the fee owner, and it's a duty tied to the property itself, not something the owner can fully offload just by hiring a manager.
The manager's exposure generally tracks its own conduct
A manager's own liability in the same suit typically arises from its own independent acts or omissions in performing management services — for example, actual knowledge of a reported hazard and a failure to act on it, negligent selection or supervision of a maintenance or security vendor, or personally directing a self-help lockout (see the Commercial Eviction Handbook's self-help/lockout data — wrongful-lockout exposure, including treble damages in some states, attaches to whoever actually changed the locks or directed that it be done, which in a managed property is very often on-site management staff, not the owner personally).
The practical result: neither party's exposure automatically covers the other's
When both are named in the same suit, a claim centered on a structural or long-standing condition of the property tends to implicate the owner's duty most directly; a claim centered on how staff actually responded to a known issue, or how a lockout was carried out, tends to implicate the manager's own conduct most directly. In practice, both are frequently pursued together, and how the indemnification and additional-insured provisions above actually allocate defense costs and any judgment between owner and manager is exactly the question a well-drafted management agreement should have already answered — before a claim, not during one.
- Read your management agreement's indemnification section — know which claims you're expected to bear versus the owner, in actual language, not assumption.
- Confirm you actually hold the additional-insured endorsement on the owner's policy in writing, not just a reference to it in the management agreement.
- Confirm your own CGL, E&O, and fidelity/crime coverage are current and adequate for your own portfolio's scope.
- Use the Premises Liability Checklist (Manager Edition) for on-site staff, and the Insurance & Risk Posture Guide for coverage-level guidance.