A Proactive Approach to Minimizing Risks is Key
by Jason Jones
Protecting investment properties involves more than just securing a solid insurance policy–it requires a proactive approach to minimizing risks that could result in costly losses.
Most often, regular review and maintenance also serve as another opportunity to communicate with the tenant and property managers about challenges specific to the area. By addressing potential issues early, landlords and property managers can prevent disruptions and maintain a safe environment for tenants. The consequences of poor maintenance and infrequent property review can negatively affect business income and your tenants.
Fire Prevention
Fires are one of the most common losses, often a result of cooking mishaps, electrical issues, or arson. Vacant properties are considerably more susceptible to fire loss, and addressing squatters has become a very hot topic. It is common for vacant locations to not have active heat or electricity, so when squatters require warmth, they may opt to set a small fire within the home to help fend off frigid temperatures. Unfortunately, these fires can easily get out of control–causing smoke and fire damage to the property. It is very important to ensure vacant properties are locked and/or boarded up to limit the opportunity for unwanted guests to enter the property.
Fire can lead to significant and costly damage — don’t underestimate the importance of educating tenants on fire safety. Maintaining functional smoke detectors in a home, whether occupied, vacant, or under renovation, can alert occupants or passersby of possible danger and the need to call emergency services. Property owners may also consider utilizing additional fire suppression tools.
Water Damage
Water-related losses, such as frozen pipes, can lead to extensive and costly property damage. Keep indoor temperatures above 55°F (higher in more northern locations), insulate exposed pipes, and encourage tenants to let faucets drip during freezing conditions. Leak sensors and automatic shutoff valves are relatively easy to install and provide early detection and intervention, minimizing damage.
For homes that are vacant or are not expected to be occupied for a lengthy period of time, property owners should consider winterizing the property. Winterizing a home involves draining or insulating plumbing, sealing windows and doors, and inspecting the HVAC system. Generally, draining the water lines at the property has a high success rate in addressing frozen pipe concerns, preventing undetected plumbing leaks, and avoiding other water-related losses that could go unnoticed for days, weeks, or even months. The technologies mentioned above can assist with monitoring fluctuations in water usage and add the most value in conjunction with routine visits to the property.
Theft
Properties that are vacant or under renovation often attract thieves targeting appliances, tools, and materials. However, this does not mean that occupied properties are immune to burglary. To reduce the risk of theft, all properties, whether vacant or occupied, must be equipped with high-quality locks on all doors and windows.
Construction sites for homes under renovation are at the top of the list for properties reporting theft. Historically, a sizable percentage of those properties had materials and equipment out in plain sight or did not secure all parts of the home, like windows or rear access doors, with the intention of facilitating ease of entrance for their contractors. After any visit to the property, or workday has concluded, it’s important to check all windows and doors and ensure any materials or equipment are tucked away somewhere out of view.
In many cases, keeping the grounds tidy is highly effective in discouraging unwanted visitors by signaling that the property is actively maintained. Additional measures, such as motion-activated cameras and exterior lighting and alarm systems can deter potential intruders.
Trespassers are less likely to choose your property if there are cameras and high visibility lights. Encouraging neighbors to communicate anything suspicious is always helpful too. A combination of these types of risk management works to provide the most effective mitigation strategy and help decrease the likelihood of theft-related claims.
Reducing Liability Risks
Liability claims can result in substantial financial losses, but proactive measures can significantly reduce exposure. Regular property inspections are essential for identifying hazards such as loose handrails or damaged steps that could lead to accidents. Addressing these issues promptly and maintaining detailed records of repairs, including photos, can help prevent incidents and provide critical evidence if a claim arises. Scheduled maintenance plans can ensure consistent inspections and timely repairs, protecting both tenants and the investment property.
A high frequency of liability claims are related to Slip & Fall occurrences. This means a condition on the residence premises, either inside or outside, reportedly caused a tenant or a third party — think delivery driver, neighbor, etc. — to fall and injure themselves. Icy sidewalks and driveways are a mainstay in this category of risk.
It is vital to ensure the areas surrounding the home are clear of ice and snow in a timely fashion. With climate patterns changing throughout the United States, such weather is no longer solely a regional concern. Parts of the Southern U.S. have been plagued with heavy snowfall and ice in recent years, establishing a consistent plan for property review and maintenance should consider the ever-changing weather.
Being a property owner has an inherent exposure to liability risks. Reporting liability losses quickly is another way to minimize potential costs. Hoping incidents will “work itself out” or attempting to negotiate a settlement with the injured party could create delays, probable lawsuit defaults, and even binding acknowledgements that may not be in the best interests of the property owner. Protecting your livelihood as the
property owner should be at the forefront of any decision made regarding the property in question.
Mitigate Risk
While no property is entirely immune to risks, thoughtful planning and preventative measures can significantly reduce the likelihood and severity of losses. A well-maintained property also reflects responsible management, fostering long-term value and tenant satisfaction.
As experts in the industry, National Real Estate Insurance Group provides investors with personalized mitigation tips as well as fully customizable comprehensive insurance. Request a complimentary proposal today.
