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Mastering Insurance Claims: Unveiling the Best Strategies for Property Managers

Handling insurance claims for our landlord clients can be a critical part of a property management company’s services. Defining and setting proper expectations surrounding insurance claims can be just as important.

Unless we properly set expectations regarding what’s included in our services, what’s included in our standard management fee, and what is or is not available as an additional service for an additional fee we are setting ourselves and our clients up for failure in a situation that is already a stressful event.

Here are three policy options you could consider implementing:

Direct Management Policy

In this approach, your property management company takes full responsibility for managing all aspects of insurance claims. This includes filing the claim, documenting damages, coordinating with insurance adjusters, and overseeing any necessary repairs. The company would maintain open communication with the landlord, providing regular updates and seeking approval for significant decisions that exceed our predefined authority outlined in our management agreement. This policy is ideal for landlords who prefer a hands-off approach and trust the management company to handle everything efficiently. It requires your property management company to have a good understanding of insurance processes and strong organizational skills to manage multiple claims efficiently.  

If this is the approach taken by the management company it is going to require additional company time and resources.  

Consider the following: Will this service be included in your standard management fees and if not, how will you price this service? 

Assisted Management Policy

In this approach, your property management company acts as a facilitator rather than the primary manager of insurance claims. The landlord retains more control over the claims process, with the property manager providing guidance and support as needed. This could include helping to document the damage, offering advice on dealing with the insurance company, and assisting in finding contractors for repairs. This policy suits landlords who wish to be more involved in their property’s management, especially in critical areas like insurance claims. It allows for a collaborative approach, combining the landlord’s preferences with the professional expertise of your property management company.

If this is the approach taken by your management company it is vital to communicate where your services start and stop and what the landlord’s responsibilities are in resolving the insurance issue.  

Consider the following: Will you have clear boundaries for your involvement in the insurance claim and will you be able to effectively communicate them with your client in a way that prevents scope creep and still provides a high quality service that you are compensated for? 

Consultative Management Policy

In this approach, your property management company takes on a purely advisory role. You provide the landlord with the necessary information and guidance to handle the insurance claim independently. This could involve initial consultation on the best course of action, recommendations for reliable contractors, and tips for communicating with insurance adjusters. However, the bulk of the responsibility and decision-making rests with the landlord. This policy is suited for landlords who are knowledgeable about insurance processes or wish to have direct control over every aspect of their property, including insurance claims.

If this is the approach taken by your management company it is the least time and labor intensive option but may leave your client feeling like you abandoned them at a time that they need you most.

Consider the following: Will your client be satisfied with the level of service you provided during the insurance claim process and will they feel like you supported them in receiving the best outcome possible in the situation.

Conclusion

Each of these policies has its pros and cons, and the best choice depends on your ability to deliver on the services you commit to. It’s also important to clearly communicate the scope of your policy to your clients, ensuring they understand what level of service and involvement they can expect from you in the event of an insurance claim.

P.S. – Which approach did I choose?

If you want to know which approach I took, reach out to me directly and I’m happy to tell you.

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