Top 10 Mistakes Property Managers Make With Insurance
The short-term property industry is in constant motion, with multiple working parts and procedures. One of the most important responsibilities a manager has is handling insurance matters to protect themselves, their property, and their clients. However, some managers make common insurance mistakes that can hamper all parts of the process.
In this post, Safely covers some common insurance problems and gives advice on how to avoid insurance mistakes.
1. Lacking Resources to Make Solid Insurance Decisions
Many rental property managers lack experience in handling insurance matters. They may not have access to up-to-date information, common tools, or professional guidance to help them through the process. For rental property managers, the stakes are high because they’re responsible for the renters’ experience on top of property concerns.
Property managers need to take the time to familiarize themselves with the ins and outs of insurance. Ask direct questions to your broker about anything you may not understand. It also helps to rely on a network of insurers, financial advisors, lawyers, and others who can help you out.
2. Setting Impossible Compliance Goals
In the drive to stay compliant, rental property managers may set unreasonable goals for themselves, their renters, and their partners. These goals may include over-coverage of property damage, excessive risk-mitigation measures, and other overly cautious conditions.
Achieving 100% compliance is almost impossible. Although it’s better to err on the side of caution, establishing unreachable goals can result in vendors delaying projects and cost overruns. Consult with your insurance broker to set reasonable goals for your situation.
3. Not Establishing KPIs for Compliance
On the other hand, many rental property managers may fall short by not having measurable goals for insurance compliance. Key performance indicators (KPIs) give managers clarity on how close they are to reaching compliance.
Without the structure of KPIs, rental property managers may face missed renewals, lack of coverage, or lapses in renter insurance. All of these can lead to legal liability, financial loss, safety inspections, and insufficient coverage for unforeseen events. Use management software and occasional audits to set reasonable KPIs.
4. Relying on the Wrong Data for Compliance
Rental property managers may make the mistake of relying on inaccurate property valuations, outdated renter information, or misinterpreted insurance requirements. These mistakes can lead to insufficient compliance strategies, missed deadlines, or legal jeopardy.
Make efforts to ensure your compliance data is accurate, relevant, and updated. Use reliable data sources, occasional audits, regular reviews of property values and insurance requirements, and consultations with your broker to get on the right side of compliance issues.
5. Mismanaging Renters’ Expectations
One of the most common insurance mistakes to avoid is miscommunicating important parts of property management that affect the renter experience.
This can include not informing renters about operational changes, check-in and check-out procedures, service delays, maintenance schedule shifts, increased waiting lists for peak seasons, and other items that can disrupt the renter’s experience.
To solve this issue, rental property managers should be open about process changes, seasonal delays, and extended vendor response times. These issues can be conveyed with regular renter updates, informational packets, and occasional notices.
6. Getting Only One Insurance Quote
Many insurance customers make the mistake of agreeing to the first quote they get from a single insurer. In doing this, they could miss out on better rates and more coverage that other insurance companies have to offer.
Rental property managers can benefit greatly from obtaining quotes from multiple providers. Find a few brokers with direct experience in the short-term rental industry who know what options are best for your unique industry.
7. Miscommunicating With Insurance Brokers
Short-term rental properties have distinct needs when it comes to insurance. At a basic level, a manager needs to establish a partnership with their insurance agent to ensure all their coverage needs are being met. Clear, open, and transparent communication is the key to maintaining a positive alliance with your broker.
Take the time to discuss coverage needs, property risks, operational changes, and any other relevant information with your insurance agent. Their expertise can help you refine compliance measures and line up the appropriate coverage for your rental property.
8. Using Outdated Tools in the Compliance Management Process
Some short-term property managers still insist on using manual spreadsheets, binders, and notes to administer their insurance coverage. They discount how automated software can speed up common insurance practices like renewing COIs, and they miss out on merging insurance data with other financial data.
The chance of human error is much greater without software. Implement digital tools for tracking renewals, reviewing coverage, and managing documentation. With automated tasks and procedures, rental property managers can better identify and control risks, update information, and improve overall operations.
9. Getting Bare Minimum Insurance — or Too Much
Many rental property managers try to cut corners by getting just enough insurance to be legally compliant. Doing so can leave significant gaps in covering events like earthquakes, floods, or frequent guest turnover. It’s not that much more expensive to take out a more robust policy with add-on coverages.
Conversely, managers may be a little over-cautious and get far more insurance than is necessary. They could waste premium money on protections they don’t need, which can lead to financial inefficiencies and poor risk management. Take time to evaluate what risks you truly need, and reduce and adjust your coverage to address them.
10. Making Errors in Filing Claims
When submitting a claim for processing, some short-term rental property managers make common insurance mistakes. Not filing on time, gathering insufficient evidence, undervaluing damage costs, and generally not understanding the claims procedure can lead to delays and declined coverage.
Establish sharp protocols for documenting damages, complete with pictures and video if possible. Discuss proper filing procedures and evaluation standards with your broker to set a clear line of action when claims emerge.
Safely: Helping Rental Property Managers Avoid Complications With Insurance
Safely helps our clients steer clear of common insurance mistakes by offering commercial short-term rental coverage. Our policies are designed as tailored solutions to the unique issues rental property managers face. To learn more, get in touch with us via our online contact form.
