Renters insurance is a standard requirement for apartment dwellers across the country. Yet compliance is a persistent problem for apartment operators, from meeting compliance to optimizing insurance tracking.
While many renters have adequate policies that meet community requirements, a notable number do not; it’s too easy for residents to go unnoticed without it.
Most carriers require documentation at move-in showing that a resident has coverage in the event of unexpected events. But there are gaps. Sometimes residents cancel a policy after moving out and others forget to renew. Although carriers are aware of uninsured residents, it has historically been incredibly difficult, almost impossible, to know exactly when a policy is canceled or becomes void without a full audit.
“Residents can cause a lot of damage,” said Jordan Fishbein, director of insurance for Garden Homes, which manages 45,000 apartments. “From kitchen fires and flooding to clogged drains, incidents happen. It’s part of the business. But when a resident doesn’t have renters insurance, the claims fall on us.
“Insurance is one of the most expensive expenses and we want to keep our insurance clean. To do that, more residents need to enroll and uphold policies, and we need to leverage comprehensive follow-up strategies.”
Technology helps boost insurance enrollment
Multifamiliar has notably innovated many processes in recent years. Now, more carriers are innovating insurance with technology to increase policy enrollment and create stronger tracking processes.
Third-party insurance technology providers are easing a thorn in the industry’s side by offering next-generation solutions for insurance enrollment, certificate of insurance (COI) verification, and automated compliance tracking.
InsurTech vendors have made a significant impact on both tenants and apartment operators by creating better processes for purchasing, validating, and monitoring compliance while strengthening risk mitigation. InsurTech provider Get Covered’s most recent investment round, involving State Farm Ventures®, Garden Homes and LeFrak, brought the company’s total funding to $14.5 million.
“Prior to partnering with Get Covered, our coverage rate was around 35 percent,” said Mario Gaztambide, senior managing director of residential properties at LeFrak, which manages more than 18,000 apartments.
“Since the launch of the platform, renters insurance coverage has increased to nearly 100% in our communities.”
Integration of insurance monitoring into operator processes
The platform ensures that residents are covered with the minimum policy required by the community while keeping track of insurance policies throughout the lease term.
By embedding insurance tracking within existing carrier processes, it enables renters to quickly purchase custom insurance policies and, on the backend, equips carriers with a policy administration portal to handle verification, tracking, and COI billing.
Operators want their residents and their belongings to be protected in case something unexpected happens to their home or belongings. The liability coverage offered by renters insurance helps operators strengthen risk mitigation and cover the bottom line in the event of damage caused by a resident. Third-party tracking allows operators to outsource the process while gaining real-time visibility into community compliance.
“In terms of outcomes, you’re shifting the risk,” Fishbein said. “Any time there is a loss that is the responsibility of a resident and they have the proper coverage, their homeowners insurance will not be affected. Deductibles can be quite high, so it’s important to have a recourse to recover that and withdraw the claim from your resident’s carrier experience.”
Overcome a perceived cost problem
Residents generally understand the importance of renters insurance, but are sometimes held back by a perceived cost issue or the time burden of searching for a policy. Carriers are also turning to their InsurTech partners to offer residents a convenient and easy way to quickly purchase custom policies.
“A user-friendly platform allows residents to easily purchase a custom policy from A-rated providers and for many this is the first time they have had this protection,” Gaztambide said. “Renters can search for other policies, but it takes time. Incorporating the purchase of renters insurance into the lease is a much easier way to purchase policies, and we know it’s the right coverage that meets our community’s requirements.”
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.