Company Profile
Mountainside Pacific Property (MPP) is a small- to mid-sized company located in Denver,CO specializing in apartment unit rentals. They own 8 multi-unit apartment complexes. The company is owned by three siblings interested in minimizing risk for the business and, in the future, expanding into other markets.
- INDUSTRY– Rental Property
- UNITS- 1,560
- ANNUAL GROSS REVENUE- $10 Million
- OWNER STRUCTURE- LLC with 3 Owners
Risk Description
The company requires tenants to provide some form of liability insurance coverage incase of damage to the rented unit. The number of tenants and revolving tenant base make it nearly impossible to properly verify and enforce.
Business Situation
- MPP is a highly profitable company and looks to expand their ownership in the multi-family dwelling space.
- MPP requires proof of liability insurance prior to tenants moving in, however, the process is often time-consuming and results in the company allowing tenants to move in without the proof of liability insurance.
- They pay a significant premium for traditional insurance and worry that by making claims it may drive their premiums up. When an incident occurs, the risk is assumed by MPP and is paid out of gross revenue or their traditional insurance policy.
- MPP is looking for a more efficient tool tomitigate the risk.
Details of the Tenant Assurance Program
- Tenant Assurance is a risk management solution developed specifically for the multi-unit rental property industry.
- SRA was tasked with designing and implementing a new program for the rental property community. This new program is fast becoming a cornerstone of the industry.
- SRA provides the option for propertyowners or managers to offer an AccidentalDamage Waiver and/or ContentsProtection for each tenant.
- 1. Contents Coverage would provideoccupants with specified coveragesand coverage limits from damageswhile stored at the facility.
- 2. Accidental Damage Wavier (ADW) would provide incident coverage for damage done by tenants to the facility property and/or to other tenant’s belongings.
Resolution
SRA was able to incorporate the Tenant Assurance program and build MPP their own customized Protection Plan. This allows the utilization of tax-deferred dollars using the 831(b) tax code.
SRA’s program provides the owners the most efficient way to mitigate their potential risk, all while utilizing a well defined turnkey solution that was quickly incorporated into their business process with no impact to their day-to-day operations.
Key Takeaways
Benefits to MPP too MPP Company and Owners
- The Tenant Assurance program created the framework for a successful self-owned Protection Plan solution for MPP.
- MPP now has the ability to mitigate other risks in the future through the use of their Protection Plan.
- MPP feels the added value the programoffers will attract new tenants whilehelping retain existing ones.
- Through the help of SRA and MPP’s attorneys, ownership of the ProtectionPlan was structured to mirror the ownership of MPP.
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