3 Ways your Property can Maximize Compliance with Mandatory Renters Insurance
Adopting Renters Insurance
Property managers have a fiduciary responsibility to apartment owners to make sure an asset is fully covered.
The adoption of mandatory renters insurance into lease agreements has helped apartments better safeguard their assets and put responsibility on the resident. Full compliance pays great dividends not only for the property, but also for residents.
But industry professionals say that maintaining high resident compliance of mandatory renters insurance is difficult. Often, a resident’s policy lapses or is cancelled unbeknownst to the property.
“(Residents) come to the leasing office, they offer you a declaration page from an insurance provider showing they meet the lease requirement, they move in, and two days later they call their insurance company and cancel,” says Jay Stoltz, LeasingDesk Insurance’s Director of Market Development. “That’s a big problem. That very scenario is commonplace throughout our industry.”
Maximizing compliance at your communities is the ultimate objective and may prove to offer perks from your commercial carrier. Properties can save in multiple ways when renters insurance participation is high, Stoltz says. Commercial premiums can be lowered by raising deductibles, resident insurance pays for damages, and the property doesn’t need to supplement with its own insurance or pay the deductible.
Complete compliance, he says, starts with knowing the playing field. Available solutions work in tandem with property management systems to provide apartment operators with full awareness of resident compliance.
1. Stay on top of compliance by working with insurance provider
Only 43 percent of renters purchase insurance to cover their belongings and the unit in event of fire, smoke, water and explosion. Surprisingly, that number includes residents in communities that have a mandatory renters insurance program.
At a recent Crittenden Multifamily West conference, leasing executives agreed that it’s difficult to maintain high compliance among residents, even if they are bound to have insurance through their lease. They also said that alleviating the burden of compliance from communities and staff is key.
Stoltz said working with an insurance company that provides safeguards to help ensure full compliance enables property managers to better stay on top of resident insurance policies and fully cover an asset.
2. Alert measures ‘give assurance that everybody is compliant’
Adopting a renters insurance program that notifies both residents and the property if a policy has lapsed, been cancelled, or is about to expire helps drive compliance, Stoltz says.
Emails are sent on the property manager’s behalf to residents who show no record of insurance at the time of move in, as well as those residents who have third-party policies that are cancelled or are up for renewal. Results, Stoltz says, have been impressive. Participating properties have seen their insurance compliance boosted an average of 41 percent.
“If a resident tries to cancel or allows a policy to expire, or there is a coverage interruption for whatever reason, the insurance provider is notified and can email both the property and resident to let everyone know the resident has fallen out of compliance,” Stoltz said. “It’s an alert measure to maximize compliance.”
3. ‘Blanket’ coverage fills gaps left by non-compliance
Properties can go a step further to protect their asset in the event of a resident’s policy lapse by acquiring property damage protection through “blanket coverage,” better known as a RenterProtection policy. Coverage is an optional “overlay” to existing renter’s insurance policies and is designed to fill the gaps for those units for which the resident has not met the required liability mandate in the lease.
A management company can simply “place” a property policy on the unit, in the name of the asset owner, and get coverage up to $100,000 for resident-cause damage relating to fire, smoke, water and explosion.
While the property is billed monthly for the coverage, Stoltz says the costs associated with policy purchase and related administrative expenses may be recouped by enforcing a lease violation penalty with the resident until compliance is met.
The consensus is that, with a little planning, keeping resident compliance up ceases to be the challenge it has been for so many properties.
“If you’re going to require the lease language for renter’s insurance, you want to make sure you are compliant,” Stoltz says.
eRenterPlan and RenterProtection are offered by LeasingDesk Insurance Services, a licensed insurance agency operated by Multifamily Internet Ventures, LLC. CA Agency license # OD12126. This article is only a general description of policy coverage and not a statement of contract. Coverage is subject to the terms, provisions, exclusions, and conditions in the policy itself and in any endorsements.
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