Staying compliant with HUD requirements can be an onerous process especially when it’s related to a subject matter that is not widely familiar to most owners. I am specially referring to the universally held, but far less understood requirement of insurance. Between HUD, Freddie Mac, Fannie Mae, Bond trustee, Syndicators, etc., ensuring your insurance program remains complaint on all insurance requirements can be a difficult task. Insurance requirements can change more frequently than expected and it’s important your insurance broker is providing updates on these changes as they happen and allowing you to make any necessary changes to your insurance program to main compliance.
In addition, we are seeing an increase in the lender’s level of analysis of larger portfolio’s even when the insurance requirements may not have changed. Currently, we’re seeing a stronger emphasis placed on the adequacy of policy limits for blanket programs, flood insurance and policy aggregate limits on General Liability policies. Again, it is important your broker is up to speed on these developments and provides consultation on any changes that would need to be made to your insurance program prior to renewal as making these changes after the face can be unexpected and costly.
Historically, the insurance requirements for HUD have been outdated and inconsistent with the rest of the industry. However, recently several changes have been made to their requirements, which will only be enforceable on new applications. Therefore, insurance coverages that have been compliant in the past may not be on the new deals you are pursuing. It is important to be aware of these new insurance requirements and understand that impact they could have on your total cost of insurance.
We recognize these insurance requirements can change more often than owners and managers are able to keep up with. To assist owners with the dynamic environment, we spend a great deal of time educating and consulting our clients on the most current insurance coverage to place for their portfolio at the time of renewal. Franklin Street Insurance is a national brokerage firm focused on providing insurance and risk management services to the affordable housing industry. Our service platform and account teams are designed to deliver our affordable housing clients the best service, consultancy, and products in the market.
About the Author: Matthew Harrell, CIC, is a Managing Director for Franklin Street‘s Insurance division. Matt Harrell brings a wealth of industry experience to Franklin Street Insurance Services. As Managing Director, he works with property owners from across the country designing creative insurance programs structured to fit the needs of his clients’ individual portfolios. Mr. Harrell manages a book of more than 60,000 apartment units and 15 million square feet of retail, office, and industrial space. He is licensed in 45 states and has earned the distinguished Certified Insurance Counselor (CIC) designation.
