Landlord Sponsored Renters Insurance

The large Multi-family REITs have used landlord sponsored Renter's Insurance for over a decade to reduces losses, increase Cap Rates and improve financing terms. This insurance can also be a strong marketing tool because you can reduce the security deposit and offset the risk with renters insurance. Question: Why haven't the smaller independent Multi-family owners and their property managers been willing to implement a renters insurance program at their properties?

Kraig--I know that most of the owners I have worked with have seen this as an added expense and with having to slash rents/increase specials over the past two years this has not been an easy sell. When comparing the cost of the insurance (even on a bulk rate) against annualized losses, most have asserted that in effect 'self-insuring' was a better deal. In addition, there has been a move to keep the message as simple as possible for the front-line leasing team; many feel added charges/services confuse things. I really like the concept of reducing the security/performance deposit though. I'm interested too in what improvements you have seen in financing terms and cap rates with the implementationn of landlord-sponsored renter's insurance. Great topic for discussion!

Kraig - Our company has been very successful in broad sizes of clients using our renter's insurance program. The most popular program is the resident paid program where the management company/owner is not responsible for the payment of the insurnace, but faciliating the program to ensure that their residents are obtaining the appropriate liablity levels upon new move in or renter's insurnace. I think we will see more and more MFH companies starting to require insurance as they see the benefits of damage not being paid out of their budgets or resident's bank account.