Risk mitigation might not be a fun topic, but it certainly is an important one for all property managers and owners. As the popularity of renting rises across the U.S., so do the risks to management companies. Maintenance mishaps. Property loss and personal injuries. Lawsuits and lost rent. Finding effective ways to avoid, control, and transfer risks has become a necessary skill in property management.

In the first of our three-part series on risk mitigation for property managers, we address how to make proactive maintenance an important part of your playbook.

Drip. Drip. Drip. A tenant notices a leak under the kitchen sink. They put down a towel and write a note to call you, the property manager.

By the time you enter the residence, the cabinet and surrounding walls show signs of rot, plus mold and mildew are present. The plumbing needs repaired, the cabinet replaced, and the mold remediated. Now a simple leak turns into a big expense. But your property insurance will cover all those costs, right? Wrong. While some policies cover the resulting damage, no property insurance includes coverage for items like leaky pipes. In fact, many policies also have exclusions for water damage. Now both your property and budget are under water.

It is an all-too-familiar occurrence to hear about property managers who relied on insurance only to find their coverage does not apply. Even worse, this large leaky loss was preventable with a different type of coverage: a rental home warranty.

Rental Home Warranties Vs. Property Insurance

One of the simplest ways to understand the difference between warranties and insurance is to consider cause and effect.

Let’s revisit our destructive drip. A rental property warranty would cover the plumbing system which caused the leak. Insurance is designed to cover only the resulting damage, like the cabinet and mold.

But here’s where things get tricky.

Most insurance policies specifically exclude damages caused by negligence or normal wear and tear. So, not only would the property manager need to foot the bill for repairing the damage, the company also is on the hook for the plumbing system if it didn’t have a warranty in place. This common leak with a simple fix is now a lengthy repair attached to a $1,000-plus out-of-pocket price tag.

Warranties and Insurance: Better Together

Relying on insurance is like waiting for something bad to happen. It’s reactive. A rental home warranty works more proactively by fixing systems and appliances BEFORE they have a chance to cause major damages that apply to insurance. Plus, warranties cover everyday wear while insurance only protects against damages caused by named perils, such as fire, theft, or weather.

When it comes to risk mitigation, only having property insurance is like being 50% protected. Because maintenance and repairs sit as one of the biggest expenses for any property manager, a warranty can save a lot of time and money. With a rental home warranty covering systems and appliances and insurance addressing resulting losses, the two policies form an important security system for your business and its bottom line.

Rental Home Warranties as Risk Mitigation Tools

Risk comes in many forms. A rental home warranty like PWSC’s HomePRO puts the “pro” in protection to combat them all.

• Insurance Risks

Property insurance premiums are up 9% in 2023. This is on top of another 7% increase last year. In a hard insurance market, providers charge more for less coverage. When determining premiums, underwriters look at loss histories. With every claim submission, the loss history increases, and so does next year’s premium. Rental home warranties prevent many types of insurance claims by proactively making repairs that avoid greater damages. A faulty stove doesn’t become a fire. A worn-out garage door opener doesn’t result in personal injury. HomePRO helps keep your insurance premiums low without compromising coverage.

• Operational Risks

It’s easy to fall behind on non-emergency maintenance requests when managing everything in-house. It’s a challenge to build a qualified vendor network, verify third-party insurance policies and licenses, and schedule repairs, maintain an efficient system for processing requests across multiple properties, regions, and time zones, and verify the work is completed correctly. This process also discourages proactive maintenance calls and creates more headaches and higher costs. According to data published by UpKeep, every dollar spent on proactive repairs saves an average of $5 in the future.

With HomePRO, PWSC manages it all. Our team processes warranty repair requests, sources qualified technicians, and handles vendor payments. Plus, by making repairs simple for renters, they are more likely to submit issues before they progress to much costlier problems.

• Budget Risks

Systems and appliances aren’t built like they once were. If you manage multiple properties, there is a near constant need to repair blown circuits, leaky pipes, broken dishwashers, and on-the-fritz HVACs. This can be crushing in terms of time and finances. The double whammy is paying for a repair that quickly becomes a replacement across several properties. This is a quick way to blow your budget.

PWSC’s HomePRO pays for repair or replacement—all with no deductible. A study across 35,000 rental homes found that property managers’ annual maintenance costs were 30% higher than the cost of HomePRO.

Be Proactive with HomePRO

PWSC’s HomePRO Rental Property Protection mitigates the most common costs and challenges that plague property managers and owners. PWSC processes claims and coordinates directly with vendors to fix renter issues—before they lead to bigger problems. The warranty streamlines repairs, improving the renter’s experience and property manager’s efficiency while protecting against unexpected expenses. HomePRO reduces maintenance expenses, promotes cost predictability, and lowers risk exposure.  See the savings HomePRO can bring to your business!