In today’s market the operational and contractual risks faced by property managers can vary quite widely. While some owners manage the overall maintenance and care of their clients’ properties, contracting out most of the actual services, others maintain their own internal staff to service the properties.
Services may include everything from maintenance and collection of rents, to cleaning, security, bill payment services, screening of new tenants, even evaluating and purchasing inexpensive or cheap commercial insurance.
Clients also come in a wide range, from owners of large retail and commercial properties, to owners of small, rental dwellings. Each and every operation presents its own unique risks and exposures.
Properties managers need to assess and evaluating risks
Assessing the amount of risk that property managers must contend with is quite easily done, and includes the following steps:
- First, envision everything that might happen to cause some type of financial loss
- Next, estimate the probable maximum loss faced in each scenario and decide if a) it’s something that could reasonably be absorbed during day-to-day operations, b)
you could likely survive, but would endure some financial difficulty, or c) the event could possibly cause financial failure
- Assess the above risks categories to determine if you can eliminate the risks, reduce the likelihood, or minimize the probable maximum loss, and
- Finally, consider options for financing the remaining risks, either through insurance, or other risk-financing options that are available.
Also, are you merely responsible for insuring only your own risks, or must you also obtain insurance as a service for your clients? Remember that client exposures may vary greatly from one client to another.
You client may own the building, but more likely operates from a leased space containing office furniture, equipment, files and records, and so on. If there is a separate storage space for supplies, make sure that flammables such as cleaning chemicals, fuel for lawn maintenance equipment, etc., are properly labeled, separated, and stored in approved containers.
The more insurance required, the more savings could be gained by obtaining cheap commercial insurance. If you have equipment and supplies stored at multiple locations, make sure your risk and insurance review addresses all the various locations.