From Mark Taber, Arrival 3 Issue 2019
Most major decisions require some level of risk evaluation. In fact, we assess risk many times throughout each day — sometimes subconsciously. Risk management for business owners requires careful planning and attention to detail. And, as with any business, property managers must consider a variety of risk factors to help ensure safety, adhere to laws and regulations, keep operations running smoothly and maximize profitability.
Just as you must meticulously assess and try to limit the risks associated with your rental properties, insurance companies are continuously evaluating risk for those they insure. Creating coverage limits and pricing for travelers is no different.
Most, if not all, travel insurance companies look at a variety of risk factors to determine pricing for insurance coverages. The simplest factors used include the age of a traveler, length of trip and total cost of their vacation.
The models used for assessing travel insurance risk are rapidly expanding as we can now gather even more data around travel behaviors and vacation types to create better insurance solutions for vacationers. For example, a group of college students traveling to Africa will likely pay a higher insurance premium for their trip compared to a 40-something couple spending a weekend at a Florida beach resort.
As we become savvier in creating insurance plans for vacation rentals specifically, we can consider a few additional criteria: duration of the trip, location and time of year. These factors in isolation do not provide much insight for insurance actuaries; however, when we look at all three together, we could potentially and reasonably determine if weather conditions are likely to impact a trip. Using seasonality of claim data and historical weather patterns, we can formulate a practical assessment for where and when pockets of frequent hurricane and tornado activity are likely to occur. In mountain regions, heavy snow and avalanche zones can risk guest safety and possibly lead to the shutting down of roads and other areas around vacation rental properties. As the travel insurance industry continues to advance, we can use these and other data to provide even smarter, more enhanced coverage plans at the most reasonable rates for your guests.
When it comes to vacation rentals, there are a few things you should keep in mind that can reduce risk and help make your properties safe and habitable for your guests during their stays.
It’s always a sound idea to limit your liability on your vacation rental properties before you list them.
A good rule of thumb is to think about the safety precautions you would take in your own home if you have small children, pets or elderly family living with you.
For example, everyone knows that little ones like to get into and rummage through cabinets—pulling out pots and pans and strewing the contents everywhere. This can be hazardous, though, especially in areas where cleaning supplies are stored. A simple solution is to add child-safety mechanisms to all cabinets to prevent accidents. Or, what about stairs? If you manage properties with more than one story, you should always make sure stairs are secure, undamaged, code compliant and equipped with the proper railing support.
The same goes for light sockets, fixtures, smoke and carbon monoxide detectors, appliances (big and small), flooring, furniture and elevators. You want to make sure that everything from electric, gas and plumbing to flooring, counters and doors function as designed and are up to code in accordance with city, state and federal requirements. Be sure not to overlook small details. Watch for carpeting that might be unraveling in a high-traffic area, or a loose chair at the breakfast table. Little inconveniences can quickly turn into big problems if not addressed promptly, and could end up becoming a costly nightmare. If something breaks or malfunctions during a guest’s stay, hire a licensed professional right away to handle the necessary repairs or replacements prior to accepting another booking, even if this means postponing or rebooking your next guest’s stay.
Safety issues aren’t limited to indoors, of course. It’s likely that you have rentals with outdoor amenities for your guests to enjoy. These can include patio furniture, grills, hot tubs and pools, and more. As is the case with the rental’s interior, you want to make sure that everything outside is working exactly as it should be and is up to code. If you have things like golf carts available for your guests, it’s best to provide instructions on how and where to safely and properly use them upon check-in. If there are items on the property that you do not want your guests to access or use, ensure they are stored away and locked in a shed or garage.
Pool and hot tub rules with emergency contact information should be posted and made clearly visible to guests. Make sure life vests and flotation devices are accessible with instructions on how to properly use them, and have your pools regularly maintained to clear debris and achieve optimal water quality. It’s also a good idea in nearly all cases to add safety fences and covers to pools and hot tubs to help avoid accidental falls and, in the worst cases, drownings.
You also should routinely check for uneven pavement on walkways, dips and damage on lawns, brush and tree overgrowth, broken steps and loose railings and malfunctioning external lighting.
No issue is worth overlooking when it comes to your guests’ safety and helping to limit your liability.
Property managers and insurance companies alike use a combination of methods to manage risk. Travel insurance companies use data to help protect guests from the unforeseeable. And, in the specific case of providing vacation rental damage protection, we can help you repair or replace certain damage to your properties from accidents or unintentional mishaps caused by guests during their stay. You can’t rely on insurance alone, however. It’s always important to keep your rental properties in the best shape possible so your guests can enjoy their vacations to the fullest, and you can alleviate costly problems down the road.
Mark Taber has served as Dhief Insurance Officer for Generali Global Assistance (formerly CSA Travel Protection) since 2017. Prior to joining CSA-Generali, Mark held positions as Reserving Director and Actuarial Analyst for California State Automobile Association (AAA) for more than seven years. Mark holds a PhD in Mathematics and is a Fellow of the Casualty Actuarial Society.