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Property Investors: Risk Guide

Let’s set the scene – you’re a property investor or landlord. One of your tenants in your residential property overflowed their bathtub, causing damage not only to their apartment but also their neighbor’s personal property. Or, perhaps your tenant creates smoke damage as a result of a carpet installation gone wrong. As a property investor, the first question that likely pops into your mind is: Am I responsible for paying for this? Is my tenant? As a property investor, owner, or landlord, what should you know to mitigate risk? Luckily, we’ve created this guide to help.

Why You Should Negotiate Coverage as a Property Investor

Why should you ask tenants to name you as an additional insured? Well, considering the headache scenarios listed above, it becomes clear as to why you, as a property investor, might want to negotiate coverage with your tenants.

When a property investor, owner, or landlord allows a tenant to use their property, there is always the risk of receiving blame if an injury or damage occurs. Another hypothetical: Let’s say you’re the owner of Acme Corporation (hi, Looney Tunes!). In one of your stores, a customer slips on a loose piece of tile and tries to sue Acme Corporation, stating that as a result of your failure to maintain the premise, you’re liable for their injury.

You, however, know that these claims are not uncommon and have prepared accordingly by including an additional insured provision in your tenant’s lease. This additional provision requires your tenants to list you, Acme Corporation, as an additional insured.

Because plaintiffs assume landlords, property owners, and investors have “thick wallets,” they are often targets for such lawsuits. As a result, these individuals need to take extra care to protect themselves.

Tenant’s Legal Liability Coverage

The tenant’s legal liability (TLL) coverage can cover losses and damages. According to Insuranceopedia, tenants’ legal liability coverage is “insurance for loss or damage of a property resulting from an action of a person renting space at that property.” Tenant’s legal liability coverage, when purchased by a tenant, covers “the cost of the loss or damage caused by the tenant.” An A-rated commercial insurance carrier is typically who underwrites this type of coverage.

Why Invest in Tenant Legal Liability?

The Horton Group describes TLL as “a win-win for the owner and tenant.” But why? Tenant Legal Liability “is one policy [with] virtually no paperwork that can adequately protect all your properties in a state – inexpensively.”

Working as a master commercial insurance policy under the property owner, investor, or landlord’s name, “tenants are [also] named as additional insureds thus providing coverage for both parties.”

The icing on the cake? Tenant legal liability coverage is easy to administer, typically costing just a small monthly fee between $8 to $12 for tenants.

What Doesn’t TLL Cover?

First, it’s important to note that a tenant’s legal liability coverage is different from coverage that insures a tenant’s personal possessions, also called tenant’s content insurance content policy or renters’ insurance.

In many cases, when it comes to TLL coverage, the coverage only extends to fire, smoke, or leakage damage. Coverage, however, can be obtained on all risks but only through the use of a deductible. Tenants can obtain additional coverage to protect themselves against bodily injuries that might occur on your premises.

So, what does tenant’s legal liability coverage fail to cover? TLL does not cover damage that results from wrongful acts, intentional damage, or claims for a tenant’s personal possessions. These damages, however, could potentially be covered on a Commercial Property Insurance policy.

It’s Time to Best Mitigate Your Risk

There are a variety of different scenarios in which enforcing tenant’s legal liability coverage might prove beneficial. Whether your property is commercial or residential, vacant or filled, industrial, multifamily, and so on, mitigating risk as a property owner is of the utmost importance. And as the adage goes, better safe than sorry.

At Competitive Edge, we take time where others may gloss over details. We make sure to learn about your business as a whole because articulating who you are, as more than a series of profit and loss statements, allows carriers to confidently cover you and your business. Connect with us today to see how we can help you.

Why Bondability Is Important for General Contractors

in Bonding, Construction, News

Congrats! You have bondability, or at least we hope you do as a general contractor… When it comes to the construction industry, there is a high risk involved. When a general contractor has bondability, it means they’re capable of passing an insurance company’s background check of sorts, so a bond can be issued.

Although a client might save a chunk of change by choosing a contractor who isn’t bondable, choosing a general contractor who is bondable is key to their project’s success and safety. The bottom line: Choosing a contractor with bondability is something that clients do to protect themselves during construction.

At Competitive Edge, we understand bondability. We build your case to the carrier to ensure that you get the right coverage at the best price based on your real-world conditions. So, here are three reasons why it’s important for you, as a general contractor, to be bondable.

Bondability Shows Clients That You’re a Safe Option

Whether or not a general contractor has bondability tells you a lot about them. Having bondability shows clients that you’re a safe option to work with! If you don’t have bondability or if your bonding capacity is minimal (typically under $250,000), many clients might view this as an indication of problems you might have faced in the past.

Contractors who are not bondable can give off the impression that they’re inept at finishing a project, keeping up with their finances, or that they take on too many projects at once. It isn’t typical for a client to jump into work with a contractor whose background they aren’t familiar with.

When a contractor has bondability, it gives off the impression that you’re serious about your work, as a surety company must thoroughly investigate, review, and consider a contractor’s relevant information before bonding them.

Bondability Protects a Client’s Financial Investments

As a contractor, you should be bondable to give yourself and your clients financial peace. Picture this: You’re a client who has hired a non-bonded contractor. Fast forward months or years down the road, and your contractor has decided to not complete their work on your project. For you, a client whose contractor is not bondable, your financial investment is torn. A client can be out millions depending on the size of the project if they decide to choose a contractor who isn’t bondable.

General contractors have bondability because it gives clients financial protection—on the off chance that you don’t finish your work. Contractors, in large projects especially, are typically bonded so if their work does not get completed, the bonding company can step in to pay to complete the project.

As a good general contractor, you want to prioritize bondability to protect your clients as well as your reputation.

Bondability Demonstrates Professionalism

When a contractor takes the necessary steps to achieve bondability, it demonstrates that they take their work seriously. Being bondable also shows that a contractor values their clients and has their interests at heart as well.

Mike Lechner, a bonding agent at Guy Hurley, says, “Bonding capacity is an indicator of a contractor’s character, experience, and financial viability underwritten by a professional third party.”

Needless to say, a contractor who does not pursue bondability often lacks the skills to efficiently complete a project. Even if a client’s project does not need a bond cost-wise, be prepared to be asked if you are bondable. Bondability, in fact, is a quick and easy pre-qualification tool that many clients use. And, of course, you don’t want to miss out on work as a result!

Simply put: Clients want to work with professionals who yield low risk. Our team at Competitive Edge can help you be that contractor if you’re not already. If you are a general contractor who is considering bondability, contact us today at Competitive Edge to learn more.

Multifamily Property Owners, What’s Next?

in News

In 2020, the multifamily real estate industry hit more than a few challenges—including rental applications dropping 10% overall. During this time, multifamily property owners needed to think creatively about ways to transform these numbers.

Today, the multifamily property industry is thriving. It’s a great place to deploy capital for those looking for stable returns and a hedge against inflation. Moreover, CBRE reports that multifamily construction will remain elevated as well as high occupancy levels.

So, what should multifamily property owners do to maintain this thriving atmosphere? Let’s discuss.

FOCUS ON RETENTION

Currently, there is an excess of demand for highly skilled employees, as there is a surplus of multifamily opportunities. A highly skilled team of employees is essential to providing greater success for your property.

To attract and retain these employees, you need to offer a few things, including:

Competitive salaries
Training, education, support, and
Other creative employee engagement activities (like appreciation days, flexible work hours, and other fun office events!)

When you have a capable and professional team managing your tenants, it leads to greater resident satisfaction and long-term resident retention.

DON’T SHY AWAY FROM DIGITAL COMMUNICATION

Although many of us have had it with Zoom, don’t completely write digital communication off of your list!

Increased information and communication are especially essential to your success. It has become easier than ever to transition to digital forms of communication.

Get information to your tenants promptly by using tools like:

Apps
Emails, and
Texts

(See, it doesn’t only need to be Zoom!)

If you haven’t already, you might also consider implementing a web portal.

Web portals allow residents to:

Make payments
Submit maintenance requests
Review upcoming events, and
Participate in resident discussion boards

Self-guided and virtual tours will also live in your web portal and are essential to providing options for potential prospects to view properties.

SERVICE SHOULD BE AT THE FOREFRONT OF EVERYTHING YOU DO

The ongoing global pandemic has caused customer service to be at the forefront of all property manager’s minds. Good service will help demonstrate value and increase satisfaction within your property.

Timely and efficient communication is key. To ensure your residents remain happy, you should also consider accelerating response times and prioritizing maintenance requests. It has never been more important to go the extra mile for your residents and provide the best possible management experience!

THE NEEDS OF RESIDENTS ARE TRANSFORMING

Over the past two years, residents’ apartments have become one-stop-shops: Offices, gyms, and sleeping quarters all in one. This need for multi-purpose space has caused residents’ immediate needs to change.

Property management teams need to consider new ways to create space for their tenants that fit their needs.

This may mean providing access to better high-speed internet, offering reservation-based conference rooms, or establishing outdoor wellness spaces.

Ensure you remain adaptive and listen to your residents. After all, resident feedback provides great insight on how to improve experiences, which can result in increased retention and satisfaction.

ECONOMIC UNCERTAINTY REMAINS

Over the past two years, recent changes in income and employment status have brought economic uncertainty for many residents; delinquency remains top-of-mind for commercial property owners.

This considered, it’s important to prepare for the risk of increased delinquencies.

As multifamily property owners look to the future, it’s important to understand what may come. There are a few ways you can remain proactive in your approach to the coming year. It’s also extremely important to ensure you remain risk-free.

Interested in learning more? Read on for our article “Property Investors: Risk Guide.”

Cyber Liability Coverage for the New Era of Ransomware

in Cyber Insurance, General Business Insurance, News

With cybercrimes on the rise, it’s time to look not only at your practices but also your cyber liability coverage.

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