As an experienced property manager, you know that renters insurance policies are not set in stone. That’s why a one-time proof of insurance check isn’t enough to ensure coverage throughout a tenant’s lease.
Many landlords and property managers try to cover their bases by requiring their tenants to add them to their policies as additional interest, allowing them to receive updates directly from the carrier. However, some landlords aren’t aware of the drawbacks of additional interest, from insufficient updates to extra manual work for their office.
Let’s get into where additional interest fails and what you can do to fill in the gaps.
What Is Additional Interest?
Additional interest, also known as interested party or third-party designee, is a designation in insurance policies that allows a third party to receive updates on another person’s insurance coverage. In the context of renters insurance, this is typically the landlord or property manager who has a vested interest in the policy’s status.
When added as an additional interest, these parties receive notifications about policy cancellations and sometimes claims. This helps landlords ensure their tenants maintain required coverage. However, there are drawbacks to relying solely on additional interest notifications, which we’ll explore next.
The Drawbacks of Additional Interest
Inbox overflow
Being listed as an additional interest on every tenant’s insurance policy might inundate your mailbox with notification letters you have to open and manage. It’s not solving the problem of dealing with policy cancellations, it’s just adding more work to your to-do list.
Result: Increased busywork and decreased efficiency for your team
Update delays
Insurers aren’t required to mail cancellation notices to additional interests for up to 60 days in some states. During this time, your assets and tenants may be left unprotected for a long stretch without your knowledge.
Result: More coverage gaps
Potential for insufficient coverage
Most states only require that insurers send notices to additional interest for cancellations, not limit changes. If you’re relying on additional interest letters for updates, you may not learn the coverages have been decreased until it’s too late.
Result: Units put out of compliance with the lease without notice given
Challenges in getting tenants’ coverage reinstated
Even after receiving additional insured notice, it’s still your job to get your renter back on track promptly. This tedious task can lead to dozens of back-and-forth emails and phone calls for just one tenant, wasting time that could be better spent on strategy and new business.
Result: Frustration and wasted resources
Risky third-party letter opening and notification vendors
There are some companies that suggest they can take care of all the work going through additional interest letters and notifications, but often times those processes are inefficient, loaded with compliance violations (including sending your renters’ personally identifiable information overseas), and still leave you with work to be done after you’re notified of a cancellation.
Result: Exposed renters’ data, compliance violations, and still more work to be done
Being included as additional interest may work for smaller owner-landlords with only a couple of rental units to oversee. However, due to the challenges and lack of scalability, those managing a larger building may find it difficult to keep up with an influx of letters on top of their other responsibilities.
How to Get Real-Time Visibility into Your Tenants’ Insurance
For a while, being listed as additional interest was the only way to get continuous updates on your tenant’s insurance, short of calling their carrier every month. Fortunately, more recently released automated systems now offer landlords and property managers an easier alternative.
CheckMy Resident is the only automated insurance verification solution that connects with your renters’ insurance carrier in real time and analyzes their policy data using AI to determine whether it’s active, accurate, and adequate.
Not only can you use it to set up no-touch insurance monitoring, but also to enforce risk mitigation with embedded insurance options that automatically help your renters fix their coverage gaps. That way, if your renter’s policy lapses, they’ll be prompted to reinstate coverage with no extra work from you.
Learn more about how CheckMy Resident can help you monitor renters insurance for your entire portfolio.
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