Strategies for Choosing an Insurance Program That’s Right for Your Business

Last modified on April 26th, 2022
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Accidents and damages can happen when managing or owning rental properties. That’s why it’s important to make sure your property has the right insurance coverage. Although there are plenty of options to protect your properties, choosing the best solutions and understanding common standard practices is pivotal to running a safe, modern business.

In a recent webinar, our panelists, AppFolio Insurance Services expert Austin Pardo and industry expert Michael Stern, CEO of Stern Risk Partners LLC, discussed the insurance landscape, the importance of having the right coverage, and best practices to manage your insurance coverage efficiently. Read below for answers to the questions from those who attended. 

While this article contains helpful information, we are not providing legal advice and you should be sure to consult a qualified attorney for any specific questions about insurance. 

Understanding the Value of Insurance

Suppose a resident was to accidentally cause significant damage to your property. It’s unlikely you’d recoup the cost for damages from your resident. Ensuring that your residents have proper insurance coverage can give you the confidence that your assets can be protected. 

Not only can having the right insurance coverage protect your assets, it can help you avoid filing claims against your own property insurance policy. Property insurance trends show it’s not uncommon for property insurance premiums to rise. Consider this report by Matic — it reviewed trends from 45,000 policies and 3.2 million quotes and found that insurance premiums are on the rise nationally and grew an average of 4% year-over-year. 

It’s equally important for residents to have their own renter’s insurance because it can give them peace of mind that their personal belongings are covered and protected. Most renters’ insurance policies also come with an industry standard of $100K in liability coverage, which covers any damages they cause to the property. 

If you’re still asking yourself, “Should I require my residents to carry insurance?” then check out these frequently asked questions to help you further understand the value in protecting your property: 

Why should property managers require residents to have insurance?

You should require residents to have insurance because it can protect against accidental damage they may cause, such as fire damage from cooking or water damage from the overflow of bathtubs or toilets. Typically, insurance coverage for a property owner doesn’t cover renters’ personal belongings, so it’s highly recommended that renters consider having a policy of their own. 

What best practices can a property manager use to require insurance?

While you can require your residents to carry liability insurance, you cannot force them to use a provider of your choice. If they choose not to find a provider of their own, they’re in default of their lease because they haven’t satisfied their lease requirement. There are various programs to help you enforce this requirement, including the Liability to Landlord Insurance (LLI) Program, offered through AppFolio Insurance Services. This program tracks coverage of your units and allows you to add liability coverage to uncovered units and pass the cost on to your residents. It’s important to note that liability to landlord insurance does not cover residents’ belongings — it only covers accidental damages. 

What do I put in my lease to require insurance?

It’s important that your lease states exactly what insurance coverage residents require. AppFolio Insurance Services provides customers with recommended lease language that is widely utilized in all 50 states.

How to Manage Your Insurance Effectively

Required insurance programs take a lot of effort to track and monitor. Sometimes, residents bring their own policies or cancel policies without giving notice. Without software that monitors and reports policy-related information, you could find yourself spending more time manually tracking it down. This can leave a lot of room for mistakes. 

For example, if the person responsible for managing your insurance requirements is out sick or leaves the company, do you have a plan in place to make sure your residents remain compliant? Rather than spending time and resources working in multiple systems and attempting to police the lease requirements, ensure the important information you need is right there in the software you use every day — AppFolio Property Manager. The LLI program by AppFolio Insurance Services makes it easy to track and enforce lease-required insurance coverage, allowing you to:

  • Spend less time managing insurance with built-in tracking and automation through AppFolio
  • Confidently protect your properties and residents with best in-class coverage
  • Grow your revenue by managing LLI program enrollment on behalf of residents who choose not to fulfill their requirements for an additional fee
  • Effectively provide residents with options to satisfy your insurance lease requirement

Here are more frequently asked questions to help you further understand the benefit of the LLI program:

What reports are available to see which residents don’t have insurance?

Within AppFolio Property Manager, you can view reports using the Insurance Dashboard. From there, you can easily track and manage insurance coverages; see which residents do and don’t have coverage and which policies are expiring soon; and have residents upload their proof of insurance directly via the online portal. 

Do I have to manually keep track of policies?

Our Smart Enrollment system can help you alleviate some of the manual work required to ensure your units have coverage in place. When active, Smart Enrollment saves your settings and uses criteria to run daily scans of your units’ coverage to find those that match the requirements. If Smart Enrollment detects a resident who does not have coverage that meets your criteria, it generates an email and portal notification and sends them on your behalf.

What options are available to my residents? 

When there’s an insurance requirement in your lease, residents may obtain an insurance policy from any provider of their choosing. For their convenience, they can purchase a renter’s insurance policy through their Online Portal. If you want to learn more about additional options to ensure coverage when residents don’t purchase a policy, contact us here.

At AppFolio, we believe insurance should be easy to manage. We want you to achieve 100% coverage of your residential portfolio with tools that are built into the software you use every day. The Liability to Landlord Insurance Program helps you save time and focus on what matters most. Learn more about our program and the other options available today.

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