It has become a common story in cities across the country: An apartment complex is set on fire by an e-bike lithium battery. The fire destroys not only a single apartment, but also harms neighboring units.
To protect themselves against this sort of catastrophic loss, it is up to residents to have compliant renters insurance policies in place — but who is checking? This is just one of many time-consuming processes that property owners and operators struggle to keep on top of, but which haven’t yet been addressed by the proptech industry, said Aaron Victorson, Senior Vice President of Sales and Revenue Operations for fintech company TheGuarantors.
As a result of gaps in renters insurance policies and lack of monitoring, operators can incur $20 or more in liability costs per unit per month, he said. However, solutions tailored to owners and operators are now entering the market that will reduce their risk and save them significant time and money.
“We speak to operators whose leasing teams are constantly absorbed by laborious, administrative processes,” Victorson said. “This includes downloading reports, manual compliance checks, back and forth of both physical and digital documents, and handling liability costs that impact bad debt. In a typical 200-unit community, leasing teams can squander 100+ hours on these time-consuming tasks. Today, many of these pain points can be addressed by technology.”
So far, proptech solutions have largely addressed elements of the renting process for residents. Potential residents can now view a potential apartment using virtual reality, manage all their utilities from a single app and digitally communicate maintenance issues with the property management team. Many solutions focus on quickening and smoothing the journey to their ideal home.
For the operator, the process remains highly administrative. Recognizing the lack of solutions aimed at property owners and operators, TheGuarantors launched Zero-Gap Renters Insurance.
The aim of the solution is to ease a particularly time-consuming process for operators: ensuring renters insurance compliance. While most operators require residents to have renters insurance in place, to protect the renter in cases such as theft or damage, it is difficult to enforce those policies through the duration of a lease.
Traditionally, a resident shows proof of insurance when their tenancy begins — through email, paper mail, or hand delivery — and the site team verifies the policy is valid. There’s little a property manager can do to ensure coverage is still in place a few months later. Monitoring compliance for every resident is time consuming and lacks transparency.
“A resident could cancel a policy at any time, but the property manager will only find out when there’s a worst-case scenario, increasing liability costs and bad debt,” Victorson said. “We often ask the question: ‘How many of your renters have a compliant renters insurance policy,’ and few have an answer.”
With Zero-Gap Renters Insurance, TheGuarantors uses technology to automate compliance checks throughout the lease term. If a resident changes or cancels their insurance, TheGuarantors issues a landlord-placed backdated policy so there is never a gap in coverage for the operator. In all cases, the cost of the policy falls on the resident. The operator can even choose to mark up a policy and generate a new per-unit income source.
The Zero-Gap experience is designed to reduce the manual processes that currently burden site teams, offering the only platform to digitally verify policies with virtually all U.S. carriers, Victorson said.
“No one else has used technology to create this comprehensive solution,” Victorson said. “By digitally linking the policy, we cut out the need for a leasing team to ask for evidence of a policy and then continuously check whether insurance remains up to date.”
While saving time for everyone involved, Zero-Gap Renters Insurance also gives operators an opportunity to minimize liability costs as a result of resident-caused accidents, Victorson said.
“We hear stories about a resident flooding their apartment because they hung a coat on a sprinkler, or that an iPad was missing after a maintenance repair check and the operator faced liability,” he said. “All this needs to be covered.”
Jarrod Whitaker, Senior Vice President of Residential Operations at RXR, said that TheGuarantors’ all-digital solution to track compliance on a dashboard has made a real difference to the business.
“Being able to look at one centralized dashboard and get automated notifications about resident insurance status has provided hours of time that can be carved back by our property teams,” he said. “Zero-Gap saves my teams about 15 hours per month, per property.”
Products such as Zero-Gap Renters Insurance are increasingly important as insurance costs increase, Whitaker said. Reducing risk can make a real difference to profit margins.
“Just one incident can occur and if a person doesn't have renters insurance in place, from an insurance liability standpoint, that can swell up to tens of thousands, if not hundreds of thousands of dollars,” he said. “Zero-Gap Renters Insurance has allowed us to remove that risk, protect our building, and make sure that operationally we can preserve our profit.”
The use of technology to reduce manual processes for site teams is only going to increase, Victorson said.
“Often, a process to deal with a piece of administration such as insurance compliance is good enough until it isn’t,” he said. “An operator might be fine not having a handle on compliance for years, but it only takes one incident for insurance to become a larger topic. Proptech can save time and reduce risks.”
