Insurance Risk Mitigation

INSURANCE RISK MITIGATION By Jason Fawcett, Kelson Group, and Paul Sander, Hollyburn Properties

VALUE YOUR BUILDING PROPERLY

As two veteran rental providers, both of our companies have been evolving their strategies to address the challenge of rising costs. Like many of you, our insurance costs have risen 20 to 30 per cent over the last year and we are working diligently to reduce this impact on our portfolios. Here are our top tips for how any rental housing provider, large or small, can take steps to help keep their own costs in check.

MAINTAIN A GOOD RELATIONSHIP WITH YOUR BROKER

One of the best decisions that Hollyburn has made over the years is to find, and keep, the right broker. Search out brokers that specialize in multi-family housing real estate. There is great value in going to firms that are knowledgeable in this particular housing niche. Kelson Group has been working with the same broker for almost 20. A few things to consider when choosing a broker and policy: • Have your broker seek quotes from multiple providers to get the best sense of what is on offer. • Understand what the broker’s commission structure is. The commission may be blended into the premium, but it still exists.

Try to get a cost breakdown that lists the commission separately if possible. • Decide on the risk and deductible tolerance for your company.

Different sized companies can accept different levels of risk.

Have your broker clearly spell out the deductible and rates. • Consider self-insuring to keep your deductible lower.

DON’T MAKE SMALL CLAIMS

There is no faster way to see your premium rise than to make too many small claims. Even if damages are slightly over your deductible, consider self-insuring so that you are not approaching the insurance company too often. Multiple claims will undoubtedly cost you in the long term. If you can afford it — pay it yourself. Especially as a smaller business, it may be tempting to try to low-ball your property value in order to secure a lower premium. This is a false economy because it ensures that the replacement value in the event of a claim will not be accurate or adequate. Get

With global deflation driving a sharp rise in insurance premiums over the last two years, rental providers across B.C have had to consider new strategies to mitigate risk and lower their insurance costs.

realistic advice from a broker or appraiser.

MAKE YOUR PROPERTIES STAND OUT

Demonstrate that you’re better than average to get a better rate. Show your broker that your business is professionally run, both online and in the real world. Brokers and insurance companies now make use of a lot of tools for online research, starting with the simplest such as reviews on Google maps. Make sure your online presence puts forward a good image with a current, welldesigned website with recent photos and positive results on search engines.

From a maintenance perspective, be proactive from the beginning. Prove to your broker that you have mitigated the issues relating to the most common types of claims, which are flood, fire, and ‘slip trip and fall’ injuries.

Upon purchase of a new property, address large issues like replacing the roof, re-plumbing, and electrical repairs in a timely way. Keep track of all your improvements, such as installing a monitored fire or other life safety systems, and provide the details to your broker annually. Be aware of the items on the ‘slip, trip and fall’ checklist and stay on top of the maintenance — correcting poor lighting, cracked concrete, low-clearance beams and other situations where injuries are likely to happen.

PREVENT COMMON ACCIDENTS

Despite best efforts, accidents do happen. In the event of an injury claim, try to negotiate directly with residents before proceeding to a claim. Consider preparing a waiver, and/or offering a settlement to avoid further liability issues. Managers should keep clear and accurate logs of maintenance like salting, snow clearing, etc. and be mindful to meet all bylaw regulations. Back up the proof that maintenance has been carried out with well-kept records.

SET OUT FIRE AND EMERGENCY PLANS

Work with your property managers and maintenance staff to develop effective fire and emergency plans. Communicate and post the plans throughout the property and provide details to your broker as well. Consider various ‘worst case’ scenarios and plan for the safety of everyone in the building, including staff, tenants, contractors, and guests. Decide when, and how, you will contact everyone affected by an emergency event. Clear communication in emergencies is extremely important and can help to prevent further injury or damage.

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Insurance (Cont’d)

PROMOTE YOUR TENANTS AND CONTRACTORS CARRYING THEIR OWN INSURANCE

Sometimes claims can be reduced or avoided if third parties are carrying their own insurance. For instance, Hollyburn has had fire events in the past where the cost of deductible ended up being covered by their tenant’s own insurance policy, reducing costs to the company’s policy.

It is a good idea to consider requiring contractors to carry proper insurance coverage of their own, and to check in on their progress regularly while they are on site. Accidents and damage can happen in the course of work, and it is better to catch the situation immediately and in the event of a claim, have the responsibility applied to the correct party.

PERFORM ANNUAL SUITE INSPECTIONS

Schedule regular suite inspections, annually at the least, so that you can be on top of the state of your property and be aware of any damage or situations that may lead to claims. There are a variety of issues — from general damage, to water leaks, to hoarding, to grow ops — that are best discovered and noted as soon as possible. If a claim must be made as a result of these types of situations, a lack of awareness of the extent of the damage may be decided as negligence on the landlord’s part, rather than shared with the tenant who has caused the damage.

USE CAUTION DURING CLAIM INVESTIGATIONS

In the event of a claim, make sure that an owner and/or senior management are present whenever insurance investigators are on site. Investigators are there to collect the evidence and comments that are critical to a claim being settled. Avoid giving them the opportunity to interview more junior employees or tenants who may make comments that are inaccurate or detrimental to your claim.

JOIN PROVINCIAL AND NATIONAL RENTAL BUILDING ASSOCIATIONS

Finally, consider becoming part of, and promoting, respected rental associations at provincial and national levels. These groups offer many useful resources such as forms, checklists, plans, and other information which will assist you in improving your general operations as well as your insurance budget. Many associations offer webinars and other educational opportunities. The ability to access advice from other members, many of whom have extensive experience in the industry, is also invaluable.

Seek as many accreditations as possible from groups like LandlordBC and their Certified Rental Building Program, and the be sure to let your broker know of any accreditations and awards that you receive — demonstrating your efforts will create a positive impression and help them more accurately assess your risk level, which can result in more favourable premiums.