From burn marks to flooding, renters insurance protects owners, managers and residents from damage of nearly any type.
Disastrous kitchen fires typically come to mind when considering the need for renters insurance, but what about all of those smaller yet more frequent claims? Debbie Blackford, Vice President and Designated Broker for Las Vegas-based Picerne Real Estate Group, says mishaps such as cigarette burns on kitchen countertops, flooding caused by an overflowing toilet and candle burn marks on carpeting are common occurrences that could cost residents several hundred dollars without the proper coverage. More serious accidents such as fires could cost residents thousands of dollars.
At Picerne’s three-story communities that include state-mandated fire sprinklers, Blackford says residents often knock the sprinklers with a tall piece of furniture while moving in or out, which can cause flooding in their unit as well as those below them. It is another damage that would fall on the resident without CoreLogic SafeRent’s renters insurance, which costs approximately $12 per month.
“There are lots of odds and ends that residents would otherwise be charged for when they moved out, and if something such as a kitchen countertop had to be refinished, that could cost several hundred dollars,” says Blackford, whose company began requiring renters insurance in February across its portfolio of more than 5,000 units. “We stress this when explaining to residents why it is in their best interest to obtain renters insurance. Fire, flood, explosion—anything related to that is covered.”
Pay Up
For those who call one of WestCorp Management Group’s communities home, there is no getting around not having renters insurance.
The company’s LeasingDesk renters insurance program is integrated and tracked through its RealPage property software. If residents let their coverage lapse, WestCorp has an addendum on its lease that states residents will be automatically billed on the first of the following month for liability insurance.
Pat Wiley, Vice President Education, NAAEI Faculty, says WestCorp’s onsite staff explains to residents that this supplemental renters insurance costs an average of $15 per month but only covers WestCorp’s property in the event of an emergency. It does not cover renters’ personal belongings.
Even still, convincing residents to protect themselves is an ongoing struggle.
“We find that some residents are very blasé and say ‘just charge me for the supplemental insurance’ and we point out that this is an emergency measure—it’s not preferable,” she says. “For just two or three more dollars a month, a resident could purchase full coverage for all of their belongings.”
CWS Apartment Homes has the same supplemental insurance addendum in its lease. Additionally, the company, in which 86 percent of its residents carried renters insurance, wanted to improve that penetration rate.
To do so, Shanna Berrien, Director of Insurance and Risk, introduced a bonus program that rewards its assistant community directors who bring their community's average renters insurance penetration rate to 95 percent. In less than nine months, Berrien says the company average hit that mark.
Interested Party
Apartment management companies can’t require renters to purchase insurance from a preferred carrier. However, they can improve how they track the policies of those who do carry it.
In addition to maintaining a personal liability policy of no less than $100,000, companies such as Riverstone Residential Group are asking residents to list their community as an “Interested Party” with their insurance carrier. By doing so, the insurance carrier is required to notify the community of any changes in the residents’ policies, such as lapse in coverage.
Rebecca Daniels, Resident Insurance Manager for Riverstone, says this is crucial when residents elect to purchase renters insurance from third-party carriers, which can be difficult to track.
When a property is notified of a cancellation, the resident will immediately be enrolled into Assurant Specialty Property’s Master Policy Program and charged for the minimal coverage—which is added into Riverstone’s property management software as a “rentable item” and charged to the resident as part of their monthly rental payment—ensuring the required coverage is maintained, Daniels adds.
Risk Mitigation
Today, most apartment management companies are seeking a variety of risk mitigation solutions coupled with accurate compliance reporting when looking for the renters insurance program that will best suit their needs.
Greg Lozinak, Executive Vice President and Chief Operating Officer of Waterton Residential, says his Chicago-based company has general liability and personal liability coverage through Yardi’s ResidentShield. Additionally, Waterton uses surety bonds, which, in most cases, provide more coverage than a standard security deposit, Lozinak adds.
“Most owners and managers use minimum deposits as a move-in incentive,” says Lozinak, whose company owns over 16,000 units and has required renters insurance since May 2009. “This then leaves them out of luck should the resident cause some kind of damage to the apartment.”
If an incident occurs, Lozinak says the general liability insurance payment is sent directly to Waterton. In the past, residents received the check and were responsible for then making a payment to Waterton.
Detroit-based Village Green Companies uses reports detailing the type and frequency of losses as another renters insurance risk management tool. Heidi Much, its Vice President of Risk Management Services, says that through Bader Company’s reporting tools and renters insurance program, Village Green typically recovers $140,000 to $160,000 a year in resident-caused damage over its portfolio of 35,000 units.
Although Village Green recovered less money in 2010, Green says this was due to a significantly reduced number of resident claims.
Lauren Boston is NAA’s Staff Writer. She can be reached at
lauren@naahq.org or 703/797-0678.