It’s unavoidable. Whether your apartment community is affordable, market-rate or luxury to the extreme, your residents are going to cause damages.
What makes a difference is how you handle those damages.
Apartment operators forfeit significant amounts of revenue every year by failing to file smaller insurance claims pertaining to resident-caused damages, and oftentimes these damages fall under the umbrella of coverage. The gold standard for loss recovery is about 85 percent. Entrata data indicates that clients recover only 11 percent of resident-caused damages, which clearly leaves a vast amount of money on the table.
Why is there such a disparity between available loss recovery funds and the actual money recouped? Apathy plays a large role. An estimated 29 percent of resident-caused damage claims are never filed, and lack of interest and/or motivation is a common excuse. That’s because 72 percent of these damages are less than $2,500 – and 92 percent are less than $7,500 – which leaves many apartment operators hesitant to bother with a claim.
But if you avoid doing so eight to 10 times in a given year, the forfeited funds begin to pile up and can have a negative effect on the bottom line. With that in mind, here are a few tips to follow to make the claim-filing process a bit smoother:
Increase the amount of claims: Even if the damage seems insignificant, file a claim. Recovering $1,800 might seem inconsequential for a tedious process, but get in the habit of filing these claims – particularly when the damage is something that readily falls within the parameters of coverage. In most cases, it will and the recovered funds add up to a much larger sum, especially if you have a large portfolio of communities.
File the right claim: Many claims get tripped up early in the process because they are filed improperly. Work to submit an effective claim with a comprehensive account of the damages and the proper supporting documentation.
Work to increase your claims appeal rate: The more claims you file, the more familiar with the process you’ll become. Learn from your missteps and from what works, and filing subsequent claims will become a smoother process. In addition, your rate of approved claims will likely increase.
Require renters insurance and make it easy: Resident-caused damages can often be covered by renters insurance. That’s if the resident has it. Eighty percent of apartment communities now require renters insurance, but not all of them strictly enforce it. Seeing that this is your opportunity to recover damages without filing your own claim, this is something to closely monitor. Implement software that allows residents to acquire renters insurance during the lead-to-lease process through your apartment website.
Apartment operators leave millions of dollars on the table each year by failing to file resident-damage claims. Don’t contribute to this number by allowing apathy to win.