Why Do We Have Loss Control Recs?
Most multifamily owners / managers have great disdain for loss-control recommendations. So why does this process exist?
Insurance companies, when they agree to insure a property, can’t get a perfect picture from the quote process. They are still assessing the risk at a distance, and their evaluation is worsened if the agent is misleading about property information.
The insurer wants to see and touch the property. When you begin the policy period, someone from the insurance company, from the risk control department, comes out to do an inspection.
Inspections on Multifamily Properties…What They’re Looking for
They’re looking for anything in your property that could increase the chance for a property or liability claim. A few areas that pertain specifically to multifamily businesses…
|Roofs – is there prior damage?|
|Fire sprinklers – is the suppression system annually inspected?|
|Railings – are there wide gaps in railings through which children could fall?|
|Pools – is there proper safety postings and self-latching gates?|
Not every multifamily property has state-of-the-art features and protections. Insurance companies can be very punitive in response to a poor risk-control visit, forcing you to spend major dollars to make improvements.
So How Do You Deal with Loss Control Recs?
There are two ways to respond…
- Pay for the improvements – if they are requesting simple pool postings, that’s an easy fix that any manager / maintenance person can handle. Sprinkler inspections, when you can achieve a best-in-class insurance rate, are worth the investment.
- Find a new insurance carrier – There are sometimes when recommendations are too much. Paying to fully renovate your railing system may not be worth your GL insurance premium. Different carriers have different underwriting guidelines, and you / your agent can find a new home for your insurance.
Use these tips to keep stress-levels low during the property inspection process.
Managing loss-control recs is important, but it doesn’t guarantee a low premium.