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Category: Landlord Insurance

Tennessee’s New HOA Law: What Homeowners Associations Need to Know Before 2027

Posted on by Jon Blankenship

Article Overview: Tennessee’s New HOA Law enacted from SB2326 – PC 731 – will require a fidelity bond for HOAs. This article covers the information that those HOAs need to know to be prepared.

Tennessee homeowners associations and unit owners’ associations have a new compliance requirement on the horizon. SB2326, now enacted as Public Chapter 731, amends Tennessee Code Title 66 and creates a statewide fidelity bond requirement for certain community associations.

The law takes effect on January 1, 2027, giving boards, property managers, and their insurance advisors time to prepare. But that time should be used wisely. Associations that collect assessments for common expenses will need to review their finances, evaluate current insurance coverage, and make sure the right fidelity bond protection is in place before the effective date.

For HOAs, condominium associations, community association managers, and insurance professionals, this change is more than a legal update. It is a governance and risk management opportunity.

What Public Chapter 731 Requires

Under Tennessee’s enacted SB2326 (known as Public Chapter 731), homeowners associations and unit owners’ associations that collect assessments for common expenses must obtain and maintain a blanket fidelity bond.

This bond is designed to protect the association from losses caused by theft or dishonest acts committed by individuals who have access to association funds or financial processes.

The required bond must cover losses resulting from theft or dishonesty by:

  • Officers of the association
  • Directors of the association
  • Employees of the association
  • Managing agents
  • Employees of the managing agent

In practical terms, the law recognizes that association funds may pass through several hands. Board members, staff, management companies, and management company employees may all have some level of access or control. A blanket fidelity bond helps protect the association if those funds are misused or stolen.

How Much Fidelity Bond Coverage Is Required?

The law sets a coverage formula that associations will need to calculate and monitor.

In general, the fidelity bond or insurance policy must provide coverage in an amount equal to:

The association’s reserve balances, plus one quarter of the association’s aggregate annual assessment income.

The law also establishes a minimum coverage amount of $10,000.

That means associations should not assume a small bond will be enough. Coverage needs to reflect the association’s actual financial exposure, including reserve funds and assessment income.

Why This Law Matters for Tennessee HOAs

Fidelity bonds are not just another insurance product. They are a key protection for community associations because HOAs often manage large sums of member money.

Assessment income, reserve accounts, special assessments, and operating funds are all collected for the benefit of the community. When those funds are mishandled, the impact can be severe. Associations may face delayed repairs, budget shortfalls, higher assessments, legal costs, and loss of owner trust.

Public Chapter 731 creates a clearer standard for financial protection across Tennessee community associations. It also places greater responsibility on boards and managers to understand their association’s risk profile and maintain adequate coverage.

Steps Tennessee Associations Should Take Now

To prepare for the January 1, 2027 effective date, associations should consider the following action plan:

  1. Confirm whether the association collects assessments for common expenses.
    If it does, the new requirement likely applies.
  2. Gather current financial information.
    Review reserve balances and aggregate annual assessment income.
  3. Review existing insurance policies.
    Look closely at fidelity bond, crime, employee dishonesty, and association coverage.
  4. Check who is covered.
    Make sure officers, directors, employees, managing agents, and managing agent employees are addressed.
  5. Calculate the required coverage amount.
    Use the statutory formula as a baseline: reserve balances plus one quarter of aggregate annual assessment income, subject to the $10,000 minimum.
  6. Discuss options with a your insurance agent.
    Compare policy terms, limits, and exclusions.
  7. Plan for any premium impact.
    Build expected costs into upcoming budgets.
  8. Update governance practices.
    Strengthen financial controls and board oversight.

A Compliance Requirement and a Risk Management Opportunity

Tennessee’s new HOA fidelity bond law gives associations a clear deadline and a clear responsibility. By January 1, 2027, covered homeowners associations and unit owners’ associations must have a blanket fidelity bond in place that meets the requirements of Public Chapter 731.

But compliance should not be the only goal.

This law encourages boards and managers to take a closer look at how association funds are protected, who has access to those funds, and whether current insurance programs match the association’s real exposure.

For well-prepared associations, the result can be more than legal compliance. It can mean stronger financial safeguards, better governance, and greater confidence for homeowners who trust their association to manage community funds responsibly.

Contact Brandon Patterson on our team at brandon@ownbyinsurance.com to discuss the steps your HOA needs to take for compliance and risk management.

Mastering Risk Management for Property Managers

Posted on by Jon Blankenship

Article Overview: Learn how to identify liabilities and implement effective risk management for property managers strategies to protect your properties and tenants. Actionable tips to build a strategy and more.

Property management involves far more than filling vacancies and collecting rent checks – it’s also about managing uncertainty. Every physical asset, every tenant interaction, and every vendor contract carries inherent liabilities. Without a strategic approach, you leave your business and your clients vulnerable to significant financial and reputational damage.

Effective risk management is not about eliminating every possible danger – that is an impossible standard. Instead, it focuses on identifying potential threats, assessing their likelihood, and implementing controls to minimize their impact. A proactive stance distinguishes top-tier property managers from the rest. Let’s take a look together at how to build such a strategy.

The High Cost of Reactive Management

Many property managers operate on a reactive basis, addressing issues only after they arise. While this might seem efficient in the short term, it is often the most expensive way to do business. A reactive approach leads to higher repair costs, increased insurance premiums, and potential legal battles.

Consider a simple roof leak. Handled proactively through regular inspections, it might cost a few hundred dollars to patch a minor vulnerability. Ignored until water pours into a tenant’s living room, that same leak becomes a claim for property damage, mold remediation, and potential rent abatement. Forward-thinking managers understand that spending a dollar on prevention often saves ten dollars in cure.

Step 1: Identifying Your Unique Risks

You cannot manage what you do not measure. The first step in any risk management strategy is a thorough identification process. Risks in property management generally fall into three primary categories: physical, liability, and financial.

Physical Property Risks

These are tangible threats to the building and its systems. They are the most visible risks but require diligent monitoring.

  • Structural Integrity: Foundations, roofs, and load-bearing walls.
  • Systems Failure: HVAC breakdowns, plumbing leaks, and electrical faults.
  • Environmental Hazards: Asbestos, lead paint, mold, or carbon monoxide.

Liability and Legal Risks

These risks involve people – tenants, visitors, and vendors. This is often where the most significant financial exposure lies.

  • Personal Injury: Slip-and-fall accidents on uncleared walkways or uneven pavement.
  • Security Breaches: Inadequate lighting or non-working security systems leading to theft or assault.
  • Regulatory Non-Compliance: Violating Fair Housing laws or local building codes.

Financial and Administrative Risks

These are threats to the revenue stream and data security of the business.

  • Tenant Default: High vacancy rates or unpaid rent.
  • Data Security: Breaches of sensitive tenant information or financial records.
  • Vendor Fraud: Overbilling or substandard work from unvetted contractors.

Step 2: Creating a Risk Management Plan

Once you have identified potential threats, you need a structured plan to address them. This plan serves as your operational manual for safety and compliance.

The Risk Assessment Matrix

Prioritize your risks by creating a simple matrix. Plot each identified risk based on two factors: the likelihood of it happening and the severity of the impact if it does.

  • High Probability/High Impact: These require immediate attention (e.g., a broken front gate in a high-crime area).
  • Low Probability/High Impact: These usually require insurance transfer (e.g., a major fire or natural disaster).
  • High Probability/Low Impact: These require management systems (e.g., minor wear and tear).

Developing Standard Operating Procedures (SOPs)

Your plan must be documented. Clear SOPs ensure that every member of your team knows how to handle specific situations. If a tenant reports a gas smell, the receptionist should know exactly who to call and what to tell the tenant immediately. If a snowstorm is forecast, your maintenance team should have a pre-deployed checklist for salting walkways. Ambiguity is the enemy of safety.

The Role of Risk Transfer

Not all risks can be mitigated through action alone. Risk transfer involves shifting the financial burden to another party, typically through insurance or contractual indemnification. Ensure your property owners carry adequate liability and property insurance. Furthermore, verify that all vendors working on the property carry their own workers’ compensation and general liability insurance. This prevents your client from being liable if a contractor is injured on site.

Step 3: Implementing Preventive Measures

Planning is theoretical; prevention is practical. This is the “boots on the ground” phase where you actively reduce the likelihood of incidents.

Proactive Maintenance Schedules

Move away from “break-fix” maintenance. Implement a preventive maintenance schedule that anticipates the lifecycle of building components.

  • Seasonal Inspections: Check gutters and downspouts before the rainy season. Service HVAC units before peak summer heat or winter cold.
  • Safety Audits: regularly test smoke detectors, carbon monoxide alarms, and fire extinguishers. Document these tests meticulously.
  • Common Area Upkeep: consistently inspect walkways, stairs, and railings for trip hazards or loose fixings.

Rigorous Tenant Screening

Your tenants are a significant variable in your risk equation. A rigorous screening process is your best defense against financial loss and property damage. Establish clear, non-discriminatory criteria for credit scores, income-to-rent ratios, and rental history.

  • Verify Everything: Do not rely on provided phone numbers alone. Search for the employer independently to verify income.
  • Check References: Speak to previous landlords, not just the current one. A current landlord might give a glowing review just to get a problematic tenant out.

By placing responsible tenants, you reduce the risk of missed rent, property damage, and disturbances that could lead to liability issues with neighbors.

Enhancing Security and Safety

Physical security measures deter crime and reduce liability.

  • Lighting: conduct night audits to ensure parking lots, hallways, and entryways are well-lit. Dark corners are liability hotspots.
  • Access Control: regularly audit key logs and change locks immediately upon tenant turnover. Consider smart locks to eliminate the risk of lost master keys.
  • Signage: clear signage regarding emergency exits, wet floors, or restricted areas helps defend against negligence claims.

Step 4: Documentation and Communication

In the legal world, if it wasn’t documented, it didn’t happen. Strong documentation is your shield against liability claims.

Thorough Record Keeping

Every inspection, repair request, and tenant complaint should be logged with a date and time stamp. If a tenant claims they reported a leaky ceiling three months ago and now have mold, your records should be able to prove or disprove that claim instantly.

  • Incident Reports: Create a standardized form for any accident or unusual occurrence on the property. Gather witness statements and photos immediately.
  • Vendor Compliance: Maintain a digital file for every vendor containing their W-9, current insurance certificate, and license. Set alerts for when these documents expire.

Tenant Education

Partner with your tenants in risk reduction. A well-informed tenant is a safer tenant.

  • Welcome Packets: Include clear instructions on how to shut off water mains and gas lines in an emergency.
  • Reporting Incentives: Encourage tenants to report minor leaks or issues immediately. Make it easy for them to submit requests via a mobile app.
  • Policy Enforcement: Be consistent. If you ignore a lease violation regarding unauthorized pets or grilling on balconies, you weaken your ability to enforce those rules later when a related accident occurs.

Step 5: Monitoring and Updating the Plan

The risk landscape is not static. New regulations are passed, neighborhoods change, and technology evolves. Your risk management strategy must be a living document.

The Annual Risk Audit

Dedicate time once a year to review your entire risk management plan. Ask yourself:

  • Have local laws regarding tenant rights or building codes changed?
  • Has the property aged to a point where major capital improvements (like rewiring) are necessary to prevent hazards?
  • Are our insurance coverage limits still adequate given current property values and construction costs?

Staying Ahead of Cyber Risks

As property management becomes more digital, cybersecurity becomes a critical risk vector. You hold sensitive data—social security numbers, bank accounts, and addresses.

  • Update Protocols: Ensure all software is patched and updated.
  • Staff Training: Train your team to recognize phishing emails and social engineering attacks.
  • Data Backups: Maintain encrypted backups of all critical business data to protect against ransomware attacks.

Take the Next Steps

Risk management is an integral component of professional property management. It requires a shift in mindset from reacting to problems to anticipating them. By identifying your unique risks, creating a solid plan, implementing preventive measures, and maintaining rigorous documentation, you protect not only the physical assets but also the financial health of your business and your clients.

Contact Brandon Patterson on our team at brandon@ownbyinsurance.com for help with your risk management approach.

 

Essential Risk Management Tips for Cabin & Vacation Rental Owners

Posted on by Jon Blankenship

Managing a vacation rental or cabin property offers significant opportunity, but it also comes with unique liabilities. From slip-and-fall accidents on an icy deck to property damage caused by unruly guests, the risks are real. That’s where risk management comes in.

Successful owners don’t just hope for the best; they proactively manage these risks to protect their assets and their reputation. We hope that this guide will help you outline practical strategies for mitigating liability, securing your property, and ensuring guest safety.

Prioritize Proactive Property Maintenance

Maintenance is your first line of defense against liability claims. A well-maintained property is a safer property. While aesthetic updates drive bookings, structural and safety maintenance prevents lawsuits.

Conduct Seasonal Inspections

Don’t wait for a guest to report a broken railing. Implement a rigorous inspection schedule that aligns with the changing seasons, especially for cabins located in areas with harsh weather.

  • Exterior Walkways: Check for loose pavers, uneven ground, or moss buildup that could cause slips. In winter, ensure you have a contract or plan for immediate snow and ice removal.
  • Decks and Balconies: These are high-risk areas. Inspect support beams, railings, and floorboards for rot or instability annually.
  • Fireplaces and Chimneys: If your cabin features a wood-burning stove or fireplace, professional chimney sweeping is non-negotiable to prevent carbon monoxide buildup and chimney fires.

Document Everything

Risk management relies heavily on proof. Keep a digital log of all maintenance activities. If a guest claims they were injured due to negligence, your maintenance log showing that the area was inspected and repaired two weeks prior is your strongest defense.

Guest Screening

Who you allow into your property matters just as much as the condition of the property itself. Screening guests is not about discrimination; it is about verifying identity and ensuring responsible usage.

Utilize Platform Tools and Third-Party Software

Most major booking platforms offer built-in verification tools. Ensure you require guests to have a verified identity, phone number, and email address. For direct bookings, consider using third-party screening services that can check for red flags like previous evictions or criminal history related to property damage.

Establish Clear Rental Agreements

Your listing description is not a contract. You need a signed rental agreement that explicitly outlines:

  • Maximum Occupancy: Strictly enforce limits to prevent parties that can damage your property and disturb neighbors.
  • Pet Policies: clearly define weight limits, breed restrictions (if applicable by insurance), and liability for pet damage.
  • Conduct Rules: Specify quiet hours and smoking policies.

By having a guest sign this agreement, you create a legal standing that proves they were aware of the rules before entering the property.

Secure the Right Insurance Coverage

Many new owners make the mistake of relying on standard homeowner’s insurance or the basic coverage provided by booking platforms. These often fall short when a significant claim arises.

Commercial or Vacation Rental Policies

Standard homeowner’s policies frequently exclude “business activity,” which includes short-term renting. You need a specialized vacation rental policy or a commercial liability policy.

  • Liability Limits: Aim for higher liability limits than a standard home. One million dollars is often the industry baseline, but depending on your assets, you may need more.
  • Loss of Income Coverage: If a fire or burst pipe renders your cabin unrentable for months, this coverage replaces your lost booking revenue.
  • Amenity Specifics: If you have a hot tub, swimming pool, or provide bicycles/kayaks, ensure your policy explicitly covers these high-risk amenities.

Implement Emergency Preparedness Protocols

When an emergency happens, seconds count. Your guests are likely unfamiliar with the property and the local area. You must provide the information they need to react quickly.

The Digital and Physical Welcome Guide

Don’t bury emergency numbers in a drawer. Place a laminated sheet in a highly visible location (like the fridge or near the main entry) containing:

  • The property’s exact address (guests often forget this when calling 911).
  • Emergency contact numbers for police, fire, and poison control.
  • Your 24/7 emergency contact number.
  • Location of the nearest hospital and urgent care.

Safety Equipment

Go beyond the bare minimum required by law.

  • Smart Detectors: Install smart smoke and carbon monoxide detectors that alert your phone if they go off. This allows you to call for help even if the property is vacant.
  • Fire Extinguishers: Place current, tagged fire extinguishers on every level of the home and specifically near the kitchen and outdoor grill.
  • First Aid Kits: Stock a comprehensive first aid kit and check it between stays to replenish used items.

Smart Technology for Risk Mitigation

Modern technology offers affordable ways to monitor your property without invading guest privacy.

Noise Monitoring

Noise monitoring devices measure decibel levels without recording conversations. They can alert you if noise levels exceed a certain threshold for a sustained period, often an early indicator of an unauthorized party.

Smart Locks

Keyless entry systems eliminate the risk of lost keys or unauthorized copies floating around. You can generate unique codes for each guest that expire automatically at checkout time, ensuring property security.

Water Leak Detectors

Water damage is one of the most common and expensive insurance claims. Place smart water leak sensors near water heaters, under sinks, and behind washing machines. These devices can alert you to a leak instantly, and some systems can even shut off the main water valve automatically.

Risk management is an ongoing process, not a one-time task. By implementing rigorous maintenance schedules, screening guests effectively, securing proper insurance, and leveraging smart technology, you protect more than just your property – you protect the future of your business.

Contact Brandon Patterson on our team at brandon@ownbyinsurance.com to help you take the next steps for your risk management planning.

Understanding Insurance Risks for Property Managers

Posted on by Jon Blankenship

Managing properties comes with a unique set of responsibilities and risks. Whether you’re overseeing residential units, commercial spaces, or mixed-use properties, unexpected issues can arise, from legal disputes to natural disasters. Without adequate insurance and proactive risk management, these challenges can quickly become costly problems. Let’s review some of the key insurance risks for property managers, why insurance is essential, and how to protect your business and assets with the right coverage.

Key Risks for Property Managers

Liability Risks

Property managers are responsible for ensuring that the buildings they oversee are safe for tenants, visitors, and employees. However, accidents like slip-and-fall incidents, faulty building maintenance, or injuries caused by negligence can lead to lawsuits. Even if you’re not directly at fault, you could still be held liable.

Example:
Imagine a tenant reports a cracked step leading to the front door, but repairs are delayed. One rainy day, a tenant falls on the step, causing a significant injury. Without liability insurance, the medical bills and legal fees could fall entirely on the property management company.
Mitigation Tip:
Liability insurance, specifically general liability coverage, shields you against claims of bodily injury or property damage. However, your team must be proactive – frequently inspect properties and promptly address maintenance requests.

Property Damage

Damage, whether from fire, vandalism, or malfunctioning equipment, is always a threat. While you can take measures to prevent some of these issues, unpredictable incidents can leave properties unusable, reducing income and saddling you with restoration costs.

Example:
A kitchen fire in one of your rental units could result in thousands of dollars in damages – not just to the tenant’s unit but also the wiring or plumbing that impacts adjacent apartments.
Mitigation Tip:
Having the correct commercial property insurance is a must. This type of coverage can help protect against repair costs and might even account for revenue lost during the downtime caused by repairs during a covered claim.

Tenant-Related Risks

Tenants can be unpredictable. From unpaid rent to legal disputes over claims of unfair treatment, tenant management requires attentiveness and foresight. Any misstep could result in financial strain or damage to your reputation.

Example:
A tenant disputes their security deposit withholding over property damage they caused. Without proper documentation or tenant-related legal expense insurance, you might face court fees and additional costs.
Mitigation Tip:
Monitoring tenant behavior by conducting regular inspections and keeping thorough records can protect you in contentious situations. Consider securing tenant discrimination or rent guarantee insurance to ensure stability even in difficult circumstances.

Natural Disasters

Wildfires, earthquakes, flooding – depending on your geographical location, your properties may face unpredictable environmental risks. Even with diligent preparation, recovery can be expensive without specialized coverage.

Example:
A record-breaking storm damages roofs and floods parking garages. Repairs stretch weeks, leaving units uninhabitable and tenants dissatisfied.
Mitigation Tip:
Standard property insurance often excludes specific natural disasters, requiring separate flood or earthquake policies. Evaluate your vulnerability with your insurance agent and invest in coverage that responds to your risks.

Being proactive is critical to ensure that your property management has the right protection in place. Other steps to be prepared include:

  • Conduct Comprehensive Risk Assessments
    • Evaluate each property for potential hazards. Assess whether proper safety measures are in place, such as functional smoke detectors, lighting in common areas, and secure locks. Regular assessments can help you identify vulnerabilities before they escalate into significant issues.
  • Build Strong Contracts with Tenants and Vendors
    • Clear contracts protect you and your business. Outlining responsibilities (e.g., maintenance and repair requests) reduces misunderstandings and potential disputes. Partnering with insured vendors ensures you’re not liable for damages caused by their mistakes.
  • Maintain Detailed Documentation
    • Keep meticulous records of inspections, repair requests, communication with tenants, and lease agreements. This documentation can serve as evidence in disputes or insurance claims.
  • Partner with a Reliable Insurance Agent or Broker
    • Insurance policies can be complicated, but an experienced agent can guide you toward the coverage that suits your needs. Work with someone who understands the intricacies of property management to fill in any gaps in your coverage.

Taking the Next Step

Risks are inevitable, but with proper planning and insurance, property managers can protect their investments and ensure smooth operations. Now is the time to review your policies. Are your properties covered for all potential risks? Are there gaps that could expose you to liability?

Talk with Brandon Patterson on our team today about your risks and options. Contact him by calling 865.453.1414 or emailing brandon@ownbyinsurance.com.

How Claims Impact Your Insurance Premiums

Posted on by Ownby Insurance Service

Your insurance premium is based on many factors, from the type of coverage you choose to your overall risk profile. But one aspect that often surprises policyholders is the impact of claims on their premiums. Whether you’ve recently filed a claim or you’re thinking about it, it’s important to understand how claims can influence the cost of your coverage.

Loss History: A Snapshot of Your Risk

Your loss history, or claims history, is a critical factor insurers use to determine your premium. This is essentially a record of all the claims you’ve filed in the past. Insurers view this as a representation of your risk level – policyholders who have filed multiple claims are generally seen as more likely to file additional claims in the future.

Each insurer has its own thresholds for how claims history impacts your premiums, but generally, past claims can lead to higher premiums.

Why Does Your Loss History Matter Impact Your Insurance Premiums?

Your loss history paints a picture for your insurer. For example:

  • If you’ve experienced multiple incidents, it could indicate a higher likelihood of future claims.
  • A long history of claims, even if they’re for relatively small amounts, can label you as a higher-risk policyholder.

While you can’t change your past claims, being aware of how your loss history is assessed can influence your approach to future claims.

Claim Frequency and Size Matter

Number of Claims

In insurance, the old saying “the fewer, the better” rings true. Filing multiple claims within a short time – even for small amounts – can signal a higher risk level to your insurer. Insurers often see frequent claims as an indicator of risk-prone behavior, even if the claims themselves are low-cost.

To manage your premium effectively:

  • Avoid filing claims for minor damages that fall close to or just above your deductible.
  • Consider whether the cost of repairing or replacing an item out-of-pocket is more affordable in the long run.

Claim Size

The size of the claim matters just as much as the number. Large claims require significant payouts from the insurer. When an insurer has to pay a big settlement for a loss, the chances are your premium will move upward to reflect the cost.

For instance, a single high-value claim – such as a major accident or property damage – might have a bigger impact on premiums than several smaller claims.

The Impact of Your Deductible Choice

Your insurance deductible – the amount you agree to pay out-of-pocket before your insurance kicks in – also plays a major role in claims and premiums. Filing claims for damages that barely exceed your deductible can lead to higher premiums in the future, meaning you’re left paying more overall.

The Value of a Claims-Free Credit

Insurance providers often reward policyholders who don’t file any claims over a certain period. This is commonly known as a claims-free discount or credit. Maintaining a claims-free record demonstrates a lower risk level, which insurers may reward with a reduced premium or special discounts.

Filing a claim could result in the loss of this credit, which can significantly increase your premiums in the long term. Depending on your provider, the impact of losing a claims-free credit can sometimes outweigh the benefit of filing a minor claim.

“Then Why Do I Even Have Insurance?”

All this doesn’t mean you should avoid filing claims entirely. Insurance exists to protect you in situations where the losses are too great to bear out-of-pocket. However, carefully evaluating the situation and considering the long-term implications can help you balance coverage with premium stability.

Smart Tips to Manage Insurance Claims and Premiums:

  1. Review Your Policy Carefully
    Understand your deductible amount, what types of incidents are covered, and how claims may impact things like claims-free discounts.
  2. Weigh Filing a Claim Against Out-of-Pocket Costs
    If the repair or replacement cost is close to your deductible, it may save you money long-term to pay out-of-pocket rather than file a claim.
  3. Keep Your Loss History in Mind
    Evaluate how additional claims could impact your overall risk profile and premiums.
  4. Focus on Preventative Measures
    Take steps to avoid future incidents, such as securing your home, maintaining your property, or installing safety features. Proactively reducing risks can help keep your premiums manageable over time.
  5. Bundle Your Insurance Policies
    Many insurers offer discounts for bundling, which can offset increased premiums due to claims.
  6. Ask About Claims Forgiveness
    Some insurers offer “claims forgiveness” features, where your first claim won’t impact your premium. Consider whether this add-on is available and worth adding to your policy.

When to File

Ultimately, balancing the cost of a claim versus the long-term implications for your premium is key. By thinking strategically and being proactive, you can ensure your insurance remains both effective and affordable. If you’re unsure, discuss the deductibles and potential impacts of filing the claim with our team and we’ll help you understand your options – but we won’t make the choice for you. That’s your decision!

Do You Know These 4 Often Overlooked Coverages for Property Managers?

Posted on by Ownby Insurance Service

When it comes to insurance, property managers and residential building owners often focus on general liability and property coverage. While these are crucial, there are additional risk exposures that need to be addressed. Here are four important types of coverage you might be overlooking:

  1. Errors & Omissions (E&O) Coverage

    What is it?

    Errors & Omissions insurance may help protect you against claims of negligence or inadequate work. If a tenant sues you for failing to perform your duties or for providing incorrect advice, E&O coverage might help with costly legal fees and settlements.Why you need it:
    Property management is a complex field where mistakes can happen despite best efforts. Whether it’s a clerical error that leads to financial loss or a misstep in tenant placement, E&O insurance provides vital protection.

  2. Tenant Discrimination Coverage

    What is it?

    This coverage offers protection if a tenant (or prospective tenant) alleges discrimination based on race, religion, gender, etc., during the rental process or tenancy.

    Why you need it:

    Even with the best intentions, discrimination claims can arise and lead to expensive lawsuits. Tenant discrimination coverage can help manage the financial burden of legal defense costs and settlements.

  3. Workers’ Compensation Coverage

    What is it?

    Workers’ compensation insurance can help cover medical expenses and lost wages for employees who get injured while working on your property.

    Why you need it:

    If you employ staff such as maintenance workers, cleaners, or security personnel, workers’ compensation is often legally required. But even office staff may have risk exposures such as moving large packages or injuries during on-site work. It can also protect you in lawsuits brought by employees for workplace injuries.

  4. Cyber Liability Coverage

    What is it?

    Cyber liability insurance protects against data breaches and cyber attacks, covering costs like legal fees, notification expenses, and compensation to affected parties.

    Why you need it:

    Property managers handle sensitive data, from tenant applications to payment information. A breach can not only damage your reputation but also lead to significant financial consequences. Cyber liability coverage helps mitigate these risks.Have you considered these overlooked coverages? We’re here to help you better protect your business and assets. For more detailed advice tailored to your needs, contact Brandon Patterson on our team at brandon@ownbyinsurance.com

On the Horizon: Cabin and Vacation Rental Insurance Trends as 2025 Draws Near

Posted on by Ownby Insurance Service

If you are a vacation rental owner, cabin rental owner, or rental property owner, understanding the current trends in the insurance market is essential to managing and protecting your investment. The landscape in 2023 is shaped by a series of challenges and shifts that are important to consider when evaluating your insurance options. Here’s a detailed look at the trends and challenges facing the cabin and vacation rental insurance market today.

The Market Trends

We’ve all heard talk of inflations impact on our economy, and although it is down from a peak of 9% in mid-2022, its effects continue, including homeowner and vacation rental insurance markets. Elevated prices for building materials and construction labor have persisted along with the timeframes for that works completion. This adds up to make rebuilding or repairing properties a costly endeavor. For rental property owners, this means higher expected costs and the need for adequate insurance coverage to mitigate potential financial impacts.

Increased Costs Due to Natural Disasters

Natural disasters and severe weather have become a prominent concern in the cabin and vacation rental insurance market. In 2023 alone, there were 28 severe weather events with estimated costs ranging from $1 billion to $10.5 billion. Unfortunately, vacation and cabin rental properties are frequently in areas with higher risk for natural disasters because of the correlating natural beauty of those areas. Forests, mountains, and coasts are amazing, but can also be inherently risky. Rental property owners, particularly those in high-risk areas, should assess their policies to ensure sufficient protection against these increasingly common events.

Challenges in the Insurance Marketplace

Insurance companies’ willingness to provide property insurance remains low, especially in regions with a history of significant losses. This cautious stance has led many insurers to exit markets deemed too risky, leaving property owners with fewer options. Consequently, those remaining in the market may face increased premiums or restricted coverage terms.

Growth of the Excess & Surplus Insurance Market

With traditional insurers pulling back, the excess & surplus (E&S) insurance market has expanded to fill the gap. While E&S insurers can offer more specialized coverage options, they often come with higher rates and/or reduced coverage compared to standard insurance policies. Additionally, different regulations governing E&S insurance can complicate decision-making for property owners unfamiliar with these policies and their restrictions or language.

What Rental Property Owners Can Do

Given these trends and challenges, vacation and cabin rental owners should take proactive steps to safeguard their assets:

  • Regularly Review Insurance Policies: Ensure that your coverage is up-to-date and accounts for current rebuilding costs and potential natural disaster risks.
  • Explore Additional Coverage Options: Consider E&S policies if traditional insurance is unavailable, but be mindful of the potential trade-offs in terms of cost and coverage.
  • Stay Informed About Market Changes: Keep abreast of news and developments in the insurance sector to anticipate and adapt to changes that may affect your coverage needs.

Talk with those that understand this market and can help guide you. Brandon Patterson and our experienced team can help you navigate the cabin and vacation rental insurance market. With knowledge, property owners can better position themselves to protect their investments and maintain financial resilience in the face of unforeseen events.

Reach out to Brandon today at brandon@ownbyinsurance.com for help with your coverage needs!

Why Do Natural Disasters Elsewhere Impact Insurance Rates Locally?

Posted on by Ownby Insurance Service

A hurricane in Florida. A flood in New York. A wildfire in Colorado. What do any of these have to do with Tennessee’s insurance rates? It would be easy to say, “Oh, that’s just the insurance companies charging us for money they had to pay for other claims.” However, it goes much deeper than that, so let’s discuss why losses elsewhere impact premiums here.

To start with what you probably did know – yes – there is an impact in premiums when companies lose money elsewhere. But it’s not as simple as “greed” for insurance companies. The way these companies make a profit is measured through a “combined ratio” – a metric that calculates their loss ratio and expense ratio. In other words, the amount they’ve paid out for losses is added to their business expenses and divided by the amount of premium they’ve “earned” from insureds. A combined ratio over 100 means that the company – in the most basic sense – is losing money.

Companies that continually lose money typically cease to operate after some time. That is one reason why there is an impact on your insurance rates based on losses in other parts of the country, but it’s far from the only reason. Here are three more:

Actuarial Predictions

Companies rely on actuarial science – the discipline that applies mathematical and statistical methods to the systematic observation of natural events to assess the risk of events occurring and help formulate policies that minimize this risk and its financial impact on companies and clients – to measure future risk. When there are more disasters, these measurements increase future predictions of risk, in turn resulting in filings for higher rates.

Claims Costs

When there are significant natural disasters, especially multiple disasters across the country, there is a major impact on the supply chain. The cost of materials and labor can increase significantly, as can the time for mitigation and repairs. This all adds up to higher claims costs, which in turn lead to a need for higher rates.

Reinsurance Costs

Insurance companies buy policies of their own – called reinsurance – to share the risks they insure. As claims and costs go up globally, the price of reinsurance goes up as well.

You might ask why these companies don’t just focus on areas of less risk – but it’s not that simple. A practice called “spread of risk” lessens the concerns of one major natural disaster impacting all or most of a company’s insureds. And there is risk everywhere. We may not be impacted by a hurricane, but a hailstorm, tornado, or wildfire is certainly possible.

All these factors go into ratemaking decisions for insurance companies. As we progress through hurricane season and other natural disasters occur, just keep in mind that the impacts from these events are not always immediate and not restricted to where they are happening.

If you’d like to know more, contact Brandon Patterson on our team at brandon@ownbyinsurance.com.

The Vacation and Cabin Rental Excess & Surplus Insurance Market

Posted on by Ownby Insurance Service

The property insurance marketplace remains in what is called a “hard market” as we progress through 2024. Factors including cost of materials, catastrophe losses, supply chain interruptions, and increased time and cost of labor have resulted in insurance companies reducing the amount of risks they want cover, restricting locations, and raising premiums.

These impacts are often higher in the areas that are popular for vacation and cabin rentals. For example, beach rentals are higher to insure due to coastal risks, and mountain rentals are often harder to insure due to wildfire risks. But there are still options for coverage and an independent agent can provide you with information on your choices, as they are not tied to a single insurance company like a direct writing insurance agent may be.

That being said, these options may have intricacies you are not aware of, as all insurance companies are not the same, nor or they regulated the same.

The Excess & Surplus Market

With fewer insurance companies willing to cover the risks of vacation and cabin rentals, some are turning to the Excess & Surplus (E&S) insurance market for coverage. These companies typically offer non-admitted insurance policies, which means they do not fall under the state regulations and have not been “approved” by the Department of Insurance. However, they are still reviewed by regulators, and the companies themselves may often have the same financial ratings and reviews as other companies on a national or regional level.

The positives of these options are the flexibility of the policies and rates. They can move quickly to adjust what they offer and respond to volatile markets like what we’re seeing now. They may have lower rates than competing programs, but it is important to understand if coverage differences are responsible for those rates.

The concern of these options is they are not subject to the states’ Guaranty Fund protections. This means, if the insurance company were to become insolvent, there would not be state government protection to pay claims from a fund that has already been established.

There are, however, ways to determine how great of a concern this should be for you. The financial ratings and reviews we mentioned can be reviewed by the public. Organizations like Fitch, AM Best, and/or Demotech may have reviewed the companies’ financial data and provided reports of their current standing and future outlook. These reports are fairly standardized and straightforward, often assigning letter grades like “A” to resulting reports.

So, is an E&S market the best option for your risk? In Tennessee, you may need as meaning as three admitted companies to decline your risk before you are eligible to access the E&S market. But in the current marketplace, that may not be much of an impediment. The key is to understand what is available to you, and what differences are in the policies you’re considering.

Our agents can help you do just that! We’ve been helping insure cabins and vacation rentals for many years, and we’re here to help you understand your risks and options. Contact Brandon Patterson to get started today – brandon@ownbyinsurance.com or 865.453.1414.