Tenant liability risk is a significant concern for multifamily property owners and managers. With tenant liability losses reaching a staggering $120 billion in 2023, proactive risk management has become more critical now than ever before. At the “Achieving Full Liability Protection For Your Properties” session from the recent Entrata Summit event, the panel consisting of several insurance industry experts discussed key strategies and insights for mitigating tenant liability risk and ensuring full protection for your properties. Some of the key takeaways from the session included:

The Importance of Renter's Insurance

While many properties require renter's insurance, a surprising number still do not, leaving themselves vulnerable to significant financial losses in the event of tenant-caused damages.

To better reflect the increasing costs of repairs and potential damages, many properties are raising minimum liability coverage requirements from $100,000 to $300,000. While this may seem like a significant jump, the cost increase for residents is often minimal, while the added protection for the property can be substantial.

Streamlining Insurance Verification

Manual verification of renter's insurance is time-consuming and prone to errors. Automated insurance verification services can ensure compliance and accuracy, freeing up on-site teams to focus on other critical tasks.

Exploring Captive Programs

Captive programs, where the property management company self-insures, offer property owners greater control over premiums, coverage, and claims processes. While still relatively new in the multifamily industry, captive programs are gaining traction as a way to potentially reduce costs and improve overall risk management.

Centralized Claims Management

Efficient claims management is crucial for minimizing disruptions and costs associated with tenant-caused losses. Whether handled by a third-party administrator or an internal team, centralized claims management can streamline the process and ensure consistency.

The Role of Technology

Technology solutions are essential for effective risk mitigation. Insurance verification services, master policy programs, and other technology-driven tools can streamline operations, improve compliance, and reduce the administrative burden on property management teams.

Practical Advice for Property Managers:

• Communicate transparently with residents about insurance requirements and any changes in coverage or costs.
• Balance the costs of increased liability coverage against the potential benefits of reduced risk and lower commercial insurance premiums.
• Stay informed about evolving industry trends, best practices, and technology solutions to optimize risk management strategies.
• Network with peers to share experiences and learn about new approaches to managing tenant liability.

By implementing comprehensive risk management strategies and leveraging the right technology solutions, property owners and managers can minimize financial losses, protect their assets, and create a more secure and sustainable future for their businesses. To learn more about Entrata’s insurance offerings, request a demo today.