Risk Management Best Practices
Tara Taylor / December 1, 2017
A large part of property management is risk management. One of the best ways to mitigate risk is through proper, timely maintenance of all property components. Assuming that proper maintenance is being completed, it is also important to have risk management procedures in place to help prepare for emergencies, reduce insurance claims and resulting losses, and most importantly, protect tenants, vendors and staff.
Three key risk-management best practices:
Managing certificates of insurance: Having valid certificates of general liability insurance naming the building owner and property manager as additional insured on hand for each tenant is vital. But what about all of the other insurance types required in the lease agreement? Does the tenant carry business interruption insurance, appropriate automobile coverage, etc.? All of these policies contribute to the profitability of your investment property. Holding valid certificates of insurance for vendors is equally as important. Vendors performing one-time projects on site must be required to provide proof of coverage at acceptable levels. Vendors providing recurring services should also add the additional insured language. Certificate of insurance (COI) tracking is a crucial risk management activity. Creating a tickler system or utilizing tracking software is key to avoiding unnecessary exposure to potential liability. This program can be easily reinforced by ensuring a current COI is on hand prior to paying vendors’ invoices, or verifying a tenant’s COI is current upon each anniversary of the lease.
Managing liability exposure: There are many ways to limit liability. First, consider the types and mix of tenants on your property. Are any of your tenants in a high – risk business? Are you considering this when screening potential tenants? Next, conduct regular property inspections with a risk averse mindset. Accidents, such as slips or trip and fall accidents, and water damage, caused by a pipe burst, excessive watering, etc. are some of the most common causes of insurance claims, but they are usually avoidable problems.
Managing contact information: Although we hope emergencies will not occur, it is plausible that some type of natural disaster or other event will affect your property. Having current contact information, including after-hours emergency contacts and email addresses for both tenants and vendors allows for efficient communication during emergencies. Utilize a system similar to that used for COI’s to ensure your information stays up-to-date.
At Laverty Chacón, we have systems in place to minimize risk. Are you concerned about risk exposure on your property? To discuss these strategies further, call (916)722-0333 or email me at: firstname.lastname@example.org.
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