The failure of residents to meet coverage requirements or letting policies lapse can cost owners and operators significantly, according to TheGuarantors, a fintech company serving the multifamily industry. For some operators, this can mean up to hundreds of thousands of dollars in liability costs. It can be months before operators become aware that residents have changed or canceled their policy.
Property technology (proptech) innovations have helped digitize every facet of the leasing, management, maintenance, rent collection and revenue management processes. However, most proptech improvements have traditionally been renter focused, rather than owner-operator focused. Verifying and monitoring renter insurance compliance is one area that has confounded apartment owners and operators in their quest to streamline operations. Many multifamily owners and operators require that residents carry renters insurance. But verifying that a resident has adequate insurance — and making sure that it remains in place throughout the lease — has traditionally been a manual and time-consuming process.
Renters insurance is a first line of defense for incidents that would otherwise be an operator’s liability, says New York-based TheGuarantors. Examples of incidents covered by renters insurance might include flooding of multiple units when a resident triggers a sprinkler system by hanging clothes on a sprinkler head or fire damage across several units caused by a resident’s negligent charging of their motorized scooter lithium batteries, an increasingly common occurrence.
In such instances, renters insurance would cover most if not all the liability. Renters insurance isn’t intended to replace umbrella liability or property insurance, but it’s a great chance to protect owners from smaller incidents that can add up to significant liability costs. It can provide additional coverage at no additional cost.
Automating Continuous Renters Insurance Compliance Checks
Seeing an opportunity to simplify the process owners and operators use to track residents’ renters insurance, TheGuarantors recently introduced Zero-Gap Renters Insurance. This digital platform provides operators with automated compliance checks at move-in and throughout a resident’s lease term.
Zero-Gap’s always-on monitoring tracks renters insurance activity. Including
- the purchase of a policy with TheGuarantors;
- whether a resident’s own policy with a third party meets community requirements (residents must digitally verify compliance with another carrier);
- policy expirations or lapses.
If, at any point during the lease term, a resident changes or cancels their insurance, a backdated policy is issued, preventing any coverage gaps for the operator.
While operators often can withhold keys or use other strategies to ensure new residents have renters insurance, operators can’t control whether they cancel it once they move in, TheGuarantors points out. In those situations, Zero-Gap can provide a layer of protection to avoid gaps in coverage, reducing the operator’s risk.
Digitizing the process has been a big convenience for operators who have struggled in the past to ensure renter insurance compliance. For example, Zero-Gap has helped New York City-based RXR’s residential operations team save 15 hours per month per property, according to Jarrod Whitaker, senior vice president of the group. Prior to using Zero-Gap, leasing teams had to manually survey resident files to check whether new residents had renters insurance, and if not, when it expired. It was a highly inefficient process, Whitaker says.
“In the past, someone would move in and may have had renters insurance in place, but there was really no mechanism to track and make sure that it didn’t expire or lapse,” Whitaker says. “Zero-Gap Renters Insurance from TheGuarantors allows us to pinpoint in real-time whether a resident’s insurance has lapsed. ”
TheGuarantors has done a lot of research looking into the renters insurance needs of their operator partners as well as their residents. Along the way, they determined where they could add incremental value to this space. By digitizing the process, they are helping operators reduce liability risk, save time and boost revenue while ensuring a positive resident experience.
— By Joe Gose. This article was written in conjunction with TheGuarantors, a content partner of Multifamily & Affordable Housing Business.
For more information on becoming a Multifamily & Affordable Housing Business content partner, contact Jill Dickstein.