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Real estate risk management and claims prevention.

Insurance professionals recommend risk management and claims prevention techniques because anticipating and preparing for exposures to losses are as important as maintaining insurance policies. Even insured claims are disruptive to your business, and if you have too many claims, your insurance costs will eventually rise.

Society imposes a strict responsibility on landlords to maintain a safe and secure environment for their tenants and anyone else visiting the premises. Therefore, you must evaluate your exposure to claims by surveying the safety and security of your property. Then you must implement and diligently monitor an effective risk management plan to reduce the frequency and severity of claims.

First, be sure you maintain the appropriate insurance coverage to protect yourself from third party claims. High limit, Commercial Public Liability coverage is widely available and is currently at its lowest rates in decades. Next, assess the exposures to loss at each of your apartment buildings. Develop a checklist for building personnel/managing agents to follow in order to eliminate or lessen the exposures.

Here are 10 important claims prevention tips. There may be others important for your particular properties, but these will get your checklist started:

Intercom and Door Locks: Monitor both regularly for malfunction and make repairs immediately.

Lighting: Lobby, doorways, courtyards, parking lots, elevators, etc. must be lit at all appropriate times. Routinely monitor the lighting in all public areas.

Security Personnel: If you contract out security, be sure to get a certificate of insurance naming you an additional insured on the security company's liability policy. Have your agent/broker check the amount of insurance carried and the quality of file carrier.

Surveillance Cameras: Your obligation doesn't end with the installation of a camera or two, and phony cameras are more trouble for you than an effective deterrent. Working cameras must cover all necessary areas, and trained personnel must monitor the transmissions 24 hours a day. Equipment must be kept in good working order.

Fire Exits: Fire exits must be well-protected from unauthorized entry.

Roof Door: Roof Door policy must be clearly displayed to tenants and strictly enforced.

Record Keeping: The superintendent and other building staff must keep written logs detailing dates and times of maintenance activity. For example, if a window breaks, the log should indicate dates and times for when the broken glass was found, when new glass was ordered, and when a temporary measure was taken to secure the window.

Notification to Managing Agent: Notify your managing agent verbally and in writing of a potential safely hazard and/or necessary repair.

Notification of Insurance Agent/Broker/Carrier: Notify the appropriate party as soon as practical when there is a threat of a claim.

Anticipate Trouble!: Your lack of knowledge concerning a local crime wave can hurt you. Keep abreast of local crime statistics and take appropriate precautions if a trend develops.

Remember that a risk management plan only works when it is strictly adhered to. Keep your plan current and routinely monitor those who are responsible for its success.

(Michael Zeldes is a Senior Director of Kaye Insurance Associates, Inc. In his 10 years at Kaye, Mike has arranged insurance and risk management programs for hundreds of New York area property owners, managers, cooperatives and condominiums.)
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Title Annotation:Focus on Property Management: Preparing for 21st Century
Author:Zeldes, Michael
Publication:Real Estate Weekly
Date:Apr 21, 1999
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