“Proof” of Insurance: The Problem with Accepting Declaration Pages

Property manager looking at a declaration page

When you’re managing a building that requires renters insurance for its tenants, verifying coverage is a prerequisite step before each resident moves in. For the majority of landlords and leasing offices, this means getting a copy of your resident’s policy declaration page to ensure that it meets your requirements.

But despite how common it is, this verification method leaves a lot of gaps in your protection. Let’s talk about the problems with using a declaration page as proof of insurance, and what you should do instead.

Table of Contents

What Is a Declaration Page?

A declaration page, also known as a dec page, summarizes the key details of an insurance policy, often on the first page of the document. While the layout may vary depending on the carrier, the content is generally the same across the board.

A typical dec page contains important information including the policyholder’s name, coverage types, liability limits, deductibles, and effective dates. It also may include policy details, such as insurance company name, policy number, the location covered, and carrier contact information.

However, there is a big caveat: When reading a declaration page, you’re looking at a point-in-time view. That means that it doesn’t reflect any changes that may have been made to the policy after it was downloaded. The policyholder may have lowered their coverage limits or canceled their insurance altogether, and you wouldn’t be able to tell.

The Risks of Accepting a Declaration Page as Proof of Insurance

For a while, dec pages became the industry standard for proof of insurance because that was the best available option. However, when comparing it to solutions in the modern age, it’s important to recognize some shortcomings of this document.

The document could be photoshopped

One major risk of accepting a declaration page as proof of insurance is the potential for document tampering. In today’s technological landscape, all it takes to alter or forge a document is a free software program and basic computer skills.

These altered documents can include false information about the coverage limits, policyholder details, and policy dates. More likely, they may represent an insurance policy that doesn’t exist at all.

The information could be out of date

Most renters insurance carriers allow policyholders to make changes to their policy at any time. Accepting a declaration page as proof of insurance without verifying its current status means there’s a risk of the information being outdated. The tenant might have altered their coverage, reduced limits, or even canceled the policy after providing the declaration page.

The tenant could make ongoing changes to the policy

Even if the information on a dec page is accurate at the time of review, that doesn’t mean it’ll stay that way. A tenant could initially present a comprehensive policy to fulfill lease requirements but then downgrade the coverage or cancel it altogether to save on premiums.

Without any monitoring or follow-up after the initial verification, you’ll have no idea if there’s a gap in coverage until it’s too late.

The Additional Interest Trap

Many landlords and property rental offices rely on additional interest to bridge the knowledge gap after collecting initial proof of insurance. Offered by most carriers, the additional interest designation enables a third party to receive updates on another person’s renters insurance, including claims and policy cancellations.

However, between carrier processing times and USPS delays, it can take up to 60 days for additional interests to receive notice after a policy is canceled. During this time, the tenant and their property will be left unprotected.

Other downsides of additional interest may be:

  • Mailbox overflow as policy volume increases
  • Persistent coverage gaps as the property manager gets insurance reinstated
  • Lack of notifications for other key changes, including lowered coverage limits

Even if you use a third party to receive and look over your additional interest notices, there are the additional downsides of incremental cost and the exposure of your tenants’ personal data. For even mid-sized properties, exposure of that data could lead to substantial fines from the FTC, up to $100,000 per violation.

Unlocking a Better Way to Verify Your Tenants’ Insurance

Doing away with declaration pages and implementing a more secure verification process can help eliminate the risk of accepting fraudulent or inactive policies. To thoroughly verify your tenant’s insurance, you can’t just rely on a static document. You need to get up-to-date information to ensure that their coverage is active, accurate, and adequate throughout the term of their lease.

That’s why more property managers are setting up renters insurance verification software to shift the burden off of their team. Automated solutions like CheckMy Resident can retrieve and compare this information for you instantly, so you can ensure that your residents have the coverage they need.

Additionally, CheckMy Resident is the only insurance verification process that can automatically connect with their carrier regularly during the term of their lease, confirming their policy remains unchanged and working with them to fix the problem if it falls out of compliance.

The Seven Deadly Sins of Renters Insurance for Property Management

Looking for more ways to improve your renters insurance program? Check our eBook The Seven Deadly Sins of Renters Insurance for Property Management – it’s free to download.

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Rev. Date 01/10/24