The demand for rental housing continues to grow at rates unseen since 1970 when baby boomers came of age, according to a Pew National Report published in April 2018. The same study reveals that 43 million American households lived in rental property in 2015, an increase of 9.3 million since 2004.
While this is great news for landlords who often find more tenant candidates than available units, it also increases the risk inherent in tenant liabilities. Oswald understands the risks faced by middle market and large market landlords and management companies, especially in these high-demand times. Our solution simplifies the challenges and offers the right protection.
Enforcing and managing traditional renter’s insurance requires dedicated time and specialized oversight. It further becomes a management burden for larger portfolios, especially when factoring in tenant turnover between 20-40%. This is a reactionary position in which landlords may find themselves. Sometimes landlords are successful in getting the tenant to procure and obtain insurance for the first year or two, but fail to consistently (and easily) track it. We have seen instances where a tenant produces an insurance policy as required at the time the apartment unit is leased, but cancels the policy two days later. Or the tenant may simply let the policy lapse. In large rental complexes, these instances can easily fall through the reporting cracks. Either way, the coverage is no longer in effect and the unprotected loss can occur.
Traditionally, typical insurance requirements within a standard residential lease include $100,000 of liability along with coverage for their personal property. In theory, landlords view the liability limit as if they have rights to this coverage to protect them from tenant incurred liability. While this is the intent, the reality of how coverage may respond can differ depending on scope of claim, leaving landlords with a much different outcome.
As a result, these limitations present landlords with a few challenges:
Technology continues to make inroads into the insurance industry, and addressing and efficiently
managing tenant liability becomes a much easier task today than it was just five years ago.
Oswald has created a leading-edge program to address the shortcomings that adversely
impact landlords. Known as Tenant Liability Insurance, the program is gaining national traction
for several reasons.
In addition to insurance carried by renters, landlords carry separate policies to protect their interests. These coverages can close the financial gaps left by renters’ insurance. However, the policies include high premiums and sometimes significant deductibles. For instances where tenants do not carry insurance, or their coverage does not address specific basic perils, landlords will be left with assuming these claims onto their policies or their own reserves. These claims can prove very costly, with lasting financial impact to the landlord. The compounded impact of paying out-of-pocket to cover deductibles in addition to having their policies at risk of increased cost due to claim frequency is not a favorable position.
In addition to landlord-first coverage, tenant liability insurance offers landlords the opportunity to create an alternative income stream from their existing portfolio.
As an example, an owner with 10,000 units enrolls 80% of the complex’s tenants. These 8,000 insureds pay a monthly premium to the landlord. The monthly premium includes a premium to the insurance company and an administrative fee, paid to the owner. Oswald will also work with the insurance company to provide profit sharing opportunities for the owner based upon profitability and volume. We make it easy with our proven onboarding program. Training, scripting and staggered implementation guarantees that integrating Tenants Liability Insurance into your communities will help you have more control, better coverage and keep and make money.
For more information, contact:
John Mark Tichar
Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.