Rental Insurance Programs-An Interview with Melissa Foley

I had the opportunity to meet Melissa Foley last year at the Multifamilypros Brainstorming conference. My curiosity about everything multifamily led to some questions on my part which led to the following interview. For those who know Melissa well, her passion for her profession and for the professionals she attaches herself to is clearly evident in anything she does. Check out her wonderful comments to my questions below.

J-Melissa can you tell me exactly what rental insurance is and what are the typical options for residents?

M-Renters Insurance by definition is the combination of Liability and Content Coverage. In most markets, an owner can only require a resident to carry Liability coverage which essentially covers damage to the asset. Annual premiums are typically less than $9-$10 a month to the Resident. When partnering with a Preferred Provider, residents will be “pre-approved” and can obtain coverage quickly and easily. Residents have the options to add content coverage to protect their personal belongings in the event of such things such as theft, fire, flood, etc. Generally the property will be able to file property related claims on the resident’s behalf.

J-There are always unforeseen “events” that take place in an apartment community. How does having rental insurance protect a property management company from losses?

M-With a mandatory liability program, your asset is now better protected by the resident’s liability policy and will have an opportunity to recover losses from the renter’s insurance company in the event of an accident or incident. This requirement adds a new and valuable layer of risk protection for the property owner. Average loss recoveries on most portfolios can exceed $25/unit per year. Owners and managers who have implemented mandatory liability programs have often been surprised that the recoveries from the resident’s insurance carriers far exceeded their expectations. Many recovered losses were formerly being charged to repair and maintenance, concessions or were under the property deductible and therefore were not being reimbursed prior to the liability requirement.

J-Can having a rental insurance program actually helps save money?

M-Often time’s properties have been able to reduce the costs of property insurance coverage by raising deductibles. In addition, mandatory liability coverage has been seen to reduce claims and losses at properties and this improved loss ratio has also led to lower insurance costs. Some carriers may also offer a substantial discount on premiums when a property implements a mandatory program.

J-How does having a rental insurance program affect occupancies?

M-Many Industry studies are showing that residents actually prefer communities that have an insurance requirement and may be more likely to rent. Operators across the country all agree that despite some initial hesitation from the management companies, implementing a Mandatory Program DOES NOT have a negative effect on occupancy, rents or the competitive position of the property. In fact, it is likely many of your competitors and “market comps” already enforce this requirement.

J-NOI is always super important when making decisions. How is NOI affected with a rental insurance program?

M-The increased income and decreased uninsured losses will increase NOI. In addition, a lower likelihood of incurring insured losses (due to a higher % of insured residents) will also increase the value of the real estate asset.

By working with a preferred provider, the key to uninsured loss recovery is threefold:

1. A high Policy Capture Rate – increasing the odds that a resident is insured, this is obtained through proven implementation, onsite account management and integration through your property management software and lease documents.

2. Achieving a high number of preferred policies will ensure that residents have coverage and that the claim will be handled quickly and efficiently by the “preferred underwriter” which is guaranteed to give you and your residents fair and fast service.

3. A managed and monitored claims process. A partner should provide expert 3rd party claims assistance to your sites which will generate more claims and ensure a quick process and a higher likelihood of payment on valid claims, as well as improved loss history for your property and casualty policies.

J- Melissa thanks so much for taking the time to review and provide your insights into how rental insurance programs can assist property management companies.

There are clearly some great benefits that rental insurance programs provide for property management companies. If you have any questions for Melissa feel free to post them in the comment section below of give her a call. Apartment communities are always looking for an edge and a value add to provide for current and prospective residents. Always having our residents in mind will only increase resident retention. Do you have any experiences to share on how a renter’s insurance program has helped your community? Please share in the comment section below.

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Melissa Foley is the Vice President National Sales MultiFamily Insurance Partners mfoley@mfipllc.com 480-239-5153

Written by Jonathan Saar