Within the real estate & apartment sector…insurance rates are rising significantly in 2012. The last 12 months have been some of the costliest for insurance companies—based on recent natural disasters and are highlighted in the articles below…
Building Insurance Rates Likely To Go Higher
http://www.usatoday.com/money/industries/insurance/story/2012-01-04/homeowners-insurance-rising/52367258/1
Property Catastrophe Reinsurance Rates Rise
http://www.bloomberg.com/news/2012-01-11/property-catastrophe-reinsurance-rates-rise-guy-carpenter-says.html
Below are tips to control your premium increases.
#1. Shop your insurance. Gather the names of companies/brokers who specialize in apartment building insurance. Always work with an insurance broker that represents multiple companies. A broker can give several options on insurance companies that would be best for your property, instead of one option which is the primary concern of an exclusive agent. It is important to pick an insurance company that is financially stable. Check the financial health of your potential insurer with rating companies such as A.M. Best and Standard & Poor’s.
#2. Consider higher deductibles. The higher the deductible, the less you will pay in insurance premiums for the policy. Weigh the difference & make the increase makes sense.
#3. Set up a risk management/loss control program. Insurers will lower your rates if you put a program into place that will minimize losses from fire, theft and onsite injuries. Consider installing a security or fire system. Have a systematic approach to guiding your residents/tenants into Renter’s Insurance. Renter’s Insurance will control your loss history and frequency. It is important to keep your insurer informed about changes in your business operations. This includes major purchases, expansions or changes in hiring or the nature of your operations. Ask what you can do to reduce risks such as fire or resident-related accidents and review the procedures in the event your business suffers a major catastrophe.
#4. Have the proper amount and type of insurance coverage. Determine the amount of coverage needed for your real estate and/or apartment building & verify how your broker came up with the limit of insurance coverage. Is it enough or is it too much coverage? Make your insurance broker aware of any lending insurance requirements that are mandatory; it is easier to negotiate coverage’s and pricing if all information is disclosed up front. Consider other forms of insurance, for example, Directors and Officers, business income replacement, ordinance and law, EPLI, or property management E+O. Having the right amount and type of insurance coverage along with a carefully developed business plan that includes disaster preparedness can save you money in the long run. Be sure to keep your broker fully apprised of any changes within your business that might necessitate changes to your insurance coverage. Such changes may include: adding locations, expanding your business, making an acquisition, changing the property entity name or the property DBA and/or purchasing major equipment such as tools or vehicles.
At your apartment communities and within your property management company—-what are your policies/procedures that might help soften the impact of increasing insurance premiums?
Relating to property and casualty insurance for your community, what are your insurance carriers projecting for your increases in 2012?
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Industry Knowledge, Real Estate Building Insurance, http://www.linkedin.com/groupItem?view=&gid=36805&type=member&item=76772122&qid=0dc2d3c2-c9cd-4dc8-b481-ed2e4f93d5cb&goback=%2Egna_36805
Crag Simmons
VP of PowerHour
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Power Insurance & Risk Management Group
http://www.PIRMG.com
Posted by Craig Simmons
