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Resident Liability Insurance Programs

Overview

The multifamily, student housing, senior housing and single family rental home real estate industries are experiencing a trend where large and professionally managed portfolios are implementing a mandatory liability insurance provision in their leases. A National Multifamily Housing Council (NMHC) survey sites 24% of property owners and managers required residents to carry insurance in 2008 and that today that figure is approaching 90%. The percentage is growing every day. Why has the mandatory insurance industry exploded? We believe it is because third party insurance providers are making a fortune.

In the standard arrangement, an owner or management company will partner with a third party insurance provider. That provider will be the preferred insurance provider for the portfolio. The insurance companies are collecting anywhere from $10-$30 per resident per month, they may pay out a negligible “marketing” or “administrative” fee to the owner or management company, and their loss ratios are typically under 10%. This all equals huge profit to the insurance companies.

At POPIC, we have set out to change the required liability insurance industry. Utilizing over 100 years of combined experience in insurance, real estate, accounting, and law, we have created a comprehensive, turnkey platform for our clients that crushes the model set forth by the competition. We believe it is our clients, owners and management companies, that should profit from requiring liability insurance, not a third party commercial insurance company. We have created the most efficient and profitable platform in the industry and we are changing the required liability insurance industry one portfolio at a time.

Program Options

Whether you have 100 or 100,000 units, own or manage, we have a program to fit your needs.

Captive Insurance Program

  • 75-90% of the monthly premium will be ceded to your wholly owned Segregated Business Unit Captive Insurance Company.
  • Your captive insurance company will insure against resident damage to your property, caused by fire, smoke, explosion, water damage, and falling objects.
  • The limit your captive will be exposed to, for any one loss, is the lessor of the policy limit or the deductible on your underlying property insurance. Even if a resident enrolled in the Resident Liability Program burns down the entire building, your captive will only pay the lessor of the policy limit or your underlying property deductible.
  • We expect a 10,000 unit/bed portfolio to earn a net annual profit of over $650,000. Taken at a 5% cap rate, this would increase overall portfolio value by $13 million.
  • A domestic pure captive insurance company has very high barriers to entry, including: large upfront formation fee, high fixed monthly management fee, $250,0000 capitalization requirement, and annual third party fees such as audit, tax return, and actuarial. POPIC created a structure for our clients that lowers all of the barriers to entry.

  • The POPIC Segregated Business Unit Structure provides nearly all of the same benefits as a domestic pure captive insurance company but with no up-front formation fee, no set monthly management fee, a significantly reduced initial capitalization requirement, and shared third party expenses

  • The POPIC Captive Insurance Program is structured in a way that ensures we will always have a vested interest in the success of your program.

A-Rated Insurance Program

Any Owner/Management Company uncomfortable with self-insuring for resident damage through a captive environment can access our fully insured program underwritten by an A-Rated Insurance Carrier.

Program benefits:

  • Owner/Management Company will be issued a master insurance policy from an A-Rated Insurance Carrier
  • The “Legal Liability to Landlord Insurance” policy will insure against property damage to an insured location caused by fire, smoke, explosion, water damage, and sewer back-up
  • The policy limit is $100,000 per occurrence with no deductible and no aggregate limit
  • Owner/Management Company has the ability to roll into a captive program at any time
  • Owner/Management will retain the highest allowable administrative fees per enrolled resident per month – $3 per resident per month
  • Depending on the facts of your specific case, there may also be a profit sharing opportunity

 

Administrative Services:

We make our clients’ money, not work. Whether you utilize the POPIC Captive Insurance Program or A-Rated Insurance Program, POPIC will take on complete administrative burden of implementing and running the Resident Liability Insurance Program, including:

  • Training on-site staff on Resident Liability Program
  • Integration with existing property management software
  • Actively track residents with third party insurance to ensure currency throughout the term of the lease
  • 24/7 claims handling service
  • Accounting
  • Monthly invoicing
  • Quarterly performance reviews

Still have questions? Let’s get in touch.