Offering Renters/Landlord Insurance as a Property Manager
Had the thought surface today that it would be rather convenient to be able to offer tenants renters insurance and owners a landlord policy. It seems to me that there would be some licensure involved in this but is this a conflict of interest in anyway as a property manager offering these services? Open to discussion...
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Broker New York (#10491212475)
- Diamond Door Realty
- (315) 608-1879
- [email protected]
If I didn't know any better I would think you are contemplating starting an insurance company just because you are in real estate. That is a massive undertaking and very different business.
the closest thing you can do to providing insurance for tenants or landlords is referring them to an insurance company. Anything else would be brokering and violate license laws.
Amber,
In order to sell Property & Liability Insurance you would need to be licensed. Both the individual and the broker would need to be licensed. Further, you would have to contract with the Insurance companies in order to offer their products. Further, you would need to purchase Professional Liability coverage (E&O) for that operation.
Amber,
It would be best partner with a licensed agent on this. It is not unusual for a PM to have someone they work closely with as a reference for them and clients.
Quote from @Allan Smith:
If I didn't know any better I would think you are contemplating starting an insurance company just because you are in real estate. That is a massive undertaking and very different business.
the closest thing you can do to providing insurance for tenants or landlords is referring them to an insurance company. Anything else would be brokering and violate license laws.
Yes @Allan Smith, that is what I'm talking about. Back a few years ago I had my property and casualty insurance agent license so I'm aware of what's involved to be licensed and is most certainly the path I would take. The thought was to be an independent agency so that I'd be able to work with multiple companies to find the best price/coverage for clients.
So if I'm the insurance company, what's to say I can't refer them to myself? (with proper disclosure if course). Does this violate any license law?
And yes, it's quite the undertaking that's why this is just a discussion for what can/can't be done, pros/cons, ect.
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Broker New York (#10491212475)
- Diamond Door Realty
- (315) 608-1879
- [email protected]
Quote from @John Mocker:
Amber,
In order to sell Property & Liability Insurance you would need to be licensed. Both the individual and the broker would need to be licensed. Further, you would have to contract with the Insurance companies in order to offer their products. Further, you would need to purchase Professional Liability coverage (E&O) for that operation.
@John Mocker Yes, all of that I'm aware of. Having had my license a few years back puts me ahead of the game for knowing the internals of how to setup the actual insurance company. However my curiosity has me exploring the legalities of being the insurance company while also being the property manger/owner/real estate agent.
For example, tenant A rents from property manager B. Am I as the property management company able to not only write a renters insurance policy for the tenant A and also write a landlord's policy for the owner of said property? Of course the companies would be completely separate so it would be the property management company writing the policy.
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Broker New York (#10491212475)
- Diamond Door Realty
- (315) 608-1879
- [email protected]
Quote from @Amber Forkey:
Quote from @John Mocker:
Amber,
In order to sell Property & Liability Insurance you would need to be licensed. Both the individual and the broker would need to be licensed. Further, you would have to contract with the Insurance companies in order to offer their products. Further, you would need to purchase Professional Liability coverage (E&O) for that operation.
@John Mocker Yes, all of that I'm aware of. Having had my license a few years back puts me ahead of the game for knowing the internals of how to setup the actual insurance company. However my curiosity has me exploring the legalities of being the insurance company while also being the property manger/owner/real estate agent.
For example, tenant A rents from property manager B. Am I as the property management company able to not only write a renters insurance policy for the tenant A and also write a landlord's policy for the owner of said property? Of course the companies would be completely separate so it would be the property management company writing the policy.
Amber, you would be able to insure both the property owner and the tenant without a conflict of interest. I believe you may run into some push back from your current E&O as they could see additional risk in your operations.
Another challenge is getting the insurance contracts & generating enough revenue to cover the overhead. The E&O runs about $700-$1000 per year and an agency management system ($3k -$5k per year). Many insurance carriers will not contract with you without these 2 things in place. Lower # of insurance carriers = lower retention rates.
Conservatively I say you would have to write $100,000 of annual insurance premiums to break even.
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Quote from @Amber Forkey:
Had the thought surface today that it would be rather convenient to be able to offer tenants renters insurance and owners a landlord policy. It seems to me that there would be some licensure involved in this but is this a conflict of interest in anyway as a property manager offering these services? Open to discussion...
PM cos are not insurance companies, I simply refer my clients to a local INS, co,
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I would find an independent insurance broker that would either give you a referral ( if you held a license) or allow you to sell under them. Several bigger RE companies have their own insurance agencies so the idea is a good one. The thing you have to worry about is what the best use of you time is.