Northwest Indiana Discussion

Transferring risk to residents: requiring renter's insurance as a condition of residency can reduce owners' out-of-pocket costs for resident-caused damages by nearly 80 percent.

Accidents happen; it's a fact of life. Every day, residents inadvertently expose property owners and other residents in the community to a variety of risks. Some are life threatening--such as kitchen fires--and others are simple mistakes, such as accidentally overflowing a bathtub.

Both types of situations are costly, affect the property's profitability, increase insurance premiums and can cause rifts between residents and owners. However, by transferring risk to the resident, owners can hold residents accountable for the damage residents cause and significantly improve owners' bottom lines.

"Apartment owners are susceptible to an enormous degree of risk from resident-caused damage," said Grant Berkey, Vice President, Capstone Real Estate Services Inc., an Austin, Texas-based fee management firm responsible for more than 50,000 units. "As property deductibles and premiums escalate, we are encouraging owners to protect themselves by transferring risk back to the resident. It can ultimately protect the property and its profitability when an accident occurs," he said.

NAA Lease Adds Insurance Clause

In March 2006, the National Apartment Association (NAA) Board of Directors unanimously voted to revise language in the insurance clause within the NAA Lease. Previously, the lease language urged residents to have insurance, but didn't require it as a condition of residency. Even though the resident posed a risk to the owner, the decision to obtain insurance was at the resident's discretion.

Increased insurance premiums and a recent surge of costly natural disasters were two reasons owners elevated the need to reduce their exposure to risk. Recognizing the value of risk management, NAA also sought ways to better protect its members. As a result, the organization revised the NAA Lease and gave owners the option of requiring renter's liability insurance as a condition of residency.

The updated lease now denotes that property owners do not maintain insurance to cover a resident's personal belongings, damage to the property or personal injury. Residents are still encouraged to retain insurance coverage to protect against liability claims and damages because of fire, smoke, rain, flood, water and pipe leaks. The changes effectively dispelled the myth that "my landlord covers my belongings."

To further protect owners, the revision also provides owners with the opportunity to require insurance as a condition of residency. By doing so, residents agree that damage they cause will be covered by their own insurance policies. For those owners who do not require mandatory insurance, an addendum to the lease clearly states that by opting not to have insurance, the resident acknowledges that he or she "may be responsible to others for the full cost of any injury, loss or damage caused by your

To further protect owners, the revision also provides owners with the opportunity to require insurance as a condition of residency. By doing so, residents agree that damage they cause will be covered by their own insurance policies. For those owners who do not require mandatory insurance, an addendum to the lease clearly states that by opting not to have insurance, the resident acknowledges that he or she "may be responsible to others for the full cost of any injury, loss or damage caused by your actions or the actions of your occupants or guests." Although it clearly states that residents are responsible, opting out of mandatory insurance provides little recourse for owners to collect on damages.

Damage Control

Full participation insurance at a community effectively transfers the risk from the property owner to the resident's renter's insurance provider and holds the resident accountable for any damage he or she causes to the unit or the property.

"Mandatory renter's insurance is the pinnacle in risk management strategies, and the industry is trending in that direction," Berkey said. "A resident at one of our properties recently started a grease fire in the kitchen, damaging the unit, as well as both adjacent units. The damage totaled more than $38,000 in repairs. Fortunately, the resident was insured and we were able to file our claim through their renter's insurance policy."

The claim was processed and the insurance provider paid the owner for the damages. In this scenario, neither the property's operating budget nor profitability were affected by the fire. If the resident weren't insured, the total value of the damages would have fallen to the property owner. Only after the deductible was met would the owner's insurance provider cover the remaining costs associated with the damage.

Survey Says: 25 Percent Require It

New data support the fact that implementing a renter's insurance program greatly reduces expenses. LeasingDesk Insurance Services recently commissioned a survey of apartment owners, representing more than 800,000 units, to determine owner's use and perceptions of renter's insurance. The study, which was conducted by SatisFacts Research, determined that requiring renter's insurance as a condition of residency reduces the owner's out-of-pocket costs for resident-caused damages by nearly 80 percent.

Ironically, the study found that more than 55 percent of owners acknowledged that they track expenditures related to resident-caused damages that fall below the property's insurance deductible; however, only 25 percent currently require mandatory insurance coverage. Even when owners acknowledged an increase in insurance premiums from 2004 to 2005, few had a proactive risk management solution in place to limit the property's liability.

Implementing Full Participation

t is important to note that an owner cannot actually sell a renter's insurance policy to residents. An insurance license is required to "sell" an insurance policy, so owners typically work with reputable insurance providers that specialize in the apartment market. Often an owner will enter into an agreement with a renter's insurance provider and implement a policy for each resident who is signing a lease to move in. With a full participation program, residents simply elect to accept the policy and are instantly enrolled in accordance to the arrangement that has been established on behalf of the community.

The study participants also reported that implementing a risk management program was easy. A majority of owners from the survey (82 percent) who offered and required residents to have a renter's insurance policy--and then enforced it--said they would "absolutely" recommend this type of program.

Owners who don't protect their communities through renter's insurance solutions are leaving themselves and their assets exposed to a higher degree of risk. Recognizing the impact of risk exposure, NAA has created opportunities for owners to implement better risk management solutions, such as mandatory insurance, through its revised lease. Industry data underscore the fact that owners who require mandatory renter's insurance recognize enormous savings once risk is transferred back to residents.

"Accidents do happen--it's inevitable," Berkey said. "The good news is that risk transfer solutions have a positive impact for residents, owners and the properties when something does go wrong."

NAA Lease Backed By the Industry

The National Apartment Association Lease Program is an important member benefit that is used by thousands of apartment communities nationwide. Billion-dollar real estate investment trusts (REITs), privately held firms and independent rental owners (IROs) all gain an advantage when using forms that are backed by the industry and continuously reviewed by legal counsel at the state and federal levels. For information on how to enroll in the National Apartment Association Lease Program or Renter's Liability Insurance,

I think it should be mandatory in the county of Lake in Indiana.

Smart people already have it. I even checked if it was necessary for my son's dorm room - his stuff is covered under our homeowner's policy.

My annual renters insurance cost $130 for $25,000 content and $100,000 liability and it covers any stored vehicles not in use.

I do not feel my insurance should pay if the idiot above lets the tub or sink overflow.

I see a group of people that are subsidized by the federal government who live haphazardly (shooting guns on the premises cooking on patios starting riots and owning wild animals or dangerous breeds of dogs that bite people and children that destroy property) they are scourges to the complexes and communities.

These individuals need to carry liability insurance as conditions of their lease.

G - you rent? In another thread, it seemed like you were buying/owned your home. I can't imagine not having equity in my home.

No I have never owned a home and thats the reason for me being able to retire at the age of 38.

I will tell you this we have amassed over $100,000 in wealth from not having a home in good times and have spent it in these lean times and we still are not broke.

It feels good not to have a NIPSCO bill in the winter we pay $150 a month and by January of every year we have a credit that carries us through March of that year.

Me and my wife do not have any children at home and my wife does not want to live in a big house all alone.

I have been retired 22 years and don't plan on going back to work because of the American dream which has turned into the American nightmare for many.

My family started cutting back almost 25 years ago.

I may go back to work in 3 years after reaching 62 but not to buy a home but to be able to purchase more luxury items and to live in that life of luxury.

Very interesting thread. My primary concern is how mandatory renter's insurance, paid for by the tenant, will affect or alter the landlord duty to provide and maintain habitable living premises.

How will this alter the scope and legal definition of normal wear and tear? Sounds to me like renters are being set up as prey by insurance industry lobby.

When I rented, I always had it. That was one of the first things I did after signing the lease, was call up the insurance agent and get it.

It saved me one time, when the apartment I was renting, another unit caught fire and it was above my unit, so I ended up with craploads of water damage. While everyone else was put into cheap hotels until repairs were made, I was staying at a 5 star hotel in the city. When I needed to replace furniture and items, the adjuster came in, looked around, and 3 days later I had a check to more than replace everything, along with a check to relocate to a new apartment.

I see your point.

But this new breed of tenant that carries weapons and keeps dangerous animals (Pit bull ) and discharges weapons on the premises into the air on New Years and while arguing while intoxicated on all types of substance.

They are menaces to society.

I see the scope of normal wear and tear already being eroded many knowing tenants remodel their own units to stop the fleecing.

Its common sense to repair damages you caused when living in an apartment when you move out.

When I moved out of my last apartment I rented, I left with 2 months on the lease(I bought my house) so after moving into my house, I had a month to go to the apartment(I had already told them I was not renewing at end of the lease) to repair the holes from nails, screws, etc for shelving units, and repaint, clean the stove, clean the fridge, clean the windows, clean the carpeting, replace the blinds that may have been damaged. In all it cost me $175 to do all of that, and I got my entire security deposit of $750 back, and the manager told me that the owner and maintenance were grateful that they did not have to do anything to the apartment and that they had it rented out again 2 days after I was officially gone.

To many people simply move out right at the end of the lease and do a quick clean up before they leave at the last moment, when instead if they give themselves a couple weeks, they can easily do everything themselves and save the security deposit

I say good luck to any tenant who moves in an apartment with white carpet in this area.

I have seen it done to many who moved in all around the area or ask the managers of the complex for new carpet. They give them white carpet that is thin and cheap with thick padding. It looks good but is not practical considering the climate.

After numerous cleanings it fades and looks dingy and will tear if you are not careful like a dry rotted rag which you will be charged for if you don't stay for at least 5 years.

I paint my unit with the most expensive paint and lay it on thick and all the light fixtures trim and celling fans. I refuse to entertain the thought of moving all my furniture for them to install indoor outdoor paper thin carpet on my rented floor.

We buy numerous area rugs & throw rugs and own our own steam cleaner. We have no problem with throwing an area rug away and throw rugs.

Life has changed considerable the way we were is not the norm anymore. There is knock off everything including furniture.

You can purchase vases and pictures rugs for a fraction of what we use to pay for of course it's not quality but it will suffice if you can't purchase the upscale furniture from the corner of route 30 & Broadway.

The people are very nomadic and when they move they throw most of their furniture away.

For the cost of a U-Haul and hiring several men or a moving company you can go to value city and get a whole house of furniture .

It's just not value city look around you do you see what is happening?

The world as we knew it is no more.

They don't care and should be made to carry liability insurance.

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Take a deeper look into my world it's all around you if you value your safety I would think you would understand and get local governments to enact ordinances and enforce them.

The payday loan the rental center the furniture stores that finance in store and don't report to the credit bureau.

Most anybody knows if you come up with $2,500 at tax time you can get a whole house of furniture.

http://www.theroomplace.com/common/prod ... c80e214c48


http://www.vcf.com/webapp/wcs/stores/se ... ef=1335952

They come raise hell destroy and move on

de·stroy

   /dɪˈstrɔɪ/ Show Spelled[dih-stroi] Show IPA
–verb (used with object)

1.
to reduce (an object) to useless fragments, a useless form, or remains, as by rending, burning, or dissolving; injure beyond repair or renewal; demolish; ruin; annihilate.
2.
to put an end to; extinguish.
3.
to kill; slay.
4.
to render ineffective or useless; nullify; neutralize; invalidate.
5.
to defeat completely.
–verb (used without object)
6.
to engage in destruction.
Use destroy in a Sentence
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Origin:
1175–1225; ME destroyen < OF destruire < VL *dēstrūgere, for L dēstruere ( dē- de- + struere to pick up, build)

—Related forms
de·stroy·a·ble, adjective
half-de·stroyed, adjective
pre·de·stroy, verb (used with object)
self-de·stroyed, adjective
self-de·stroy·ing, adjective
un·de·stroyed, adjective
well-de·stroyed, adjective

—Can be confused:  decimal, decimate, destroy (see usage note at decimate; see synonym note at this entry ).

—Synonyms
1. smash, level, waste, ravage, devastate. Destroy, demolish, raze imply reducing a thing to uselessness. To destroy is to reduce something to nothingness or to take away its powers and functions so that restoration is impossible: Fire destroys a building. Disease destroys tissues. To demolish is to destroy something organized or structured: to demolish a machine. To raze is to level down to the ground: to raze a fortress. 2. extirpate, annihilate, uproot.

—Antonyms
1, 2. create.

G, thanks for that . . . .

It needed to be said.

Those individuals need to be put in check!

I'm tired of running and as are many.

There need be a think tank with insurance companies. That brings to the table a new type of insurance just for these individuals who are scofflaws and bring destruction.

If they don't abide by the common sense rules of the community then the cost of them to live here amongst the law abiding should be cost prohibitive.