A closer look at risk management for habitational risks

Habitational properties — apartments, condominiums, hotels, motels — present similar property and liability risks, including fires, slips and falls, and water damage. These concerns can be addressed with effective planning and oversight, sound risk management, and regular maintenance of essential systems.

For example, research by Sequoia Insurance Company indicates that where the owner has a sound business strategy and employs an attentive property manager, losses are less frequent and less severe.

An effective inspection and maintenance program speeds identification and correction of hazardous conditions before they develop into losses. It also can provide an easy way for tenants to report adverse conditions, and to get repairs made quickly.

Tenants are often unaware of all that owners do to maintain property, and property managers can use a newsletter to keep tenants informed of safety information and improvements.

Major loss causes

Fire. Fires that might have been contained with early notification can grow larger when smoke alarms are disconnected or removed. Property owners can ensure that working smoke alarms are installed in the right places. Fresh batteries should be provided every six months; and the devices should be replaced every 10 years.

A recent fire caused by a candle revealed that a tenant had been using a closet as a bedroom. An inspection would have corrected this lease violation and prevented the use of the candle in the closet.

When possible, encourage tenants to use gas grills since charcoal grills introduce special hazards involving flammable lighter fluid, which can spill onto decking, flare-up, and ignite buildings. Improper disposal of hot coals presents another common hazard. Gas grills limit these exposures, however, ensure that tenants use them away from buildings and combustible material.

The National Fire Protection Association reports fires on habitational properties involving heating equipment, cooking, candles, grills, electrical wiring, and smoking. These reports provide valuable information on common causes of fires, and common-sense ways to avoid the risk of fire.

Local fire departments can conduct regular inspections which help to identify and correct fire hazards.

Water damage. A good inspection and maintenance program can identify and correct leaks before they cause damage. Look for warning signs such as stains, puddles, mold, softened plaster, etc. Find and repair leaks immediately.

While roofs are an obvious source of leaks, leaks also come from plumbing and appliances. Inspect water heaters regularly, and replace them at the first sign of leakage. Check hoses and fittings on washing machines. Replace rubber hoses, which are prone to bursting, with braided steel hoses.

Slips, trips and falls. Inspecting and correcting slip and trip hazards will reduce liability. Outdoors, look for cracks in sidewalks and walkways, settlement differentials, and elevation changes. Indoors, look for worn carpets and stair treads, missing or broken handrails, and uneven floors.

Consider making simple upgrades such as using reflective paint on curbs and steps to highlight changes in elevation. Provide adequate exterior and interior lighting. Respond quickly to tenants’ concerns, and rope off hazards until repairs can be made.

Playgrounds. Playgrounds present significant risks. Because children may not recognize even the most obvious hazards, playground equipment must conform to the highest safety standards. The Consumer Product Safety Commission’s Handbook for Public Playground Safety (www.cpsc.gov/CPSCPUB/PUBS/325.pdf.) offers guidance for safe apparatus, fall-cushioning material, and inspections.

Wildfires. In areas where wildfires may be expected, keep vegetation and high growth cut back at least 100 feet from buildings. Because airborne embers can ignite structures miles away from the actual fire, take steps to protect roofs, especially older roofs and those made with combustible wood shakes.

Swimming pools. Swimming pools are attractive amenities, but they must be properly maintained and protected in order to reduce liability. Pool areas must meet local health codes, and be furnished with proper rescue equipment and signage. Restrict access to tenants and their guests, and install secure fencing, gates, and locks. Be sure that access control meets municipal regulations to keep children out of the area (usually fencing of a certain height with self-closing, self-latching gates).

Building updates and maintenance

Underwriting guidelines often require policyholders to “update” critical building systems — electrical, plumbing, heating, ventilation, and air conditioning (HVAC), and roofing — when a structure has reached a certain age, or after a specified number of years. However, an update does not necessarily require that systems be replaced. Normal preventive maintenance is an acceptable update when systems meet current building codes, however, older buildings may need upgrades to newer codes.

Electrical. Periodic inspection and validation of the building’s electrical system by a licensed electrical contractor constitutes an update when the wiring is of current technology. Old-technology wiring creates a significant fire risk, and an evaluation by a licensed professional should be conducted, with the purpose of creating a plan to upgrade to newer wiring.

Plumbing. A properly-maintained plumbing system will last many years. While an entire system will rarely need replacement, an effective maintenance program will trigger repair or replacement of worn or aging components. Look for corrosion in steel piping, older cast iron drain and waste piping, and older copper piping.

Appliances. Inspect gas-fired appliances (ranges, ovens, dryers) to identify older fittings and connections, especially corrugated metal tubing and uncoated brass connectors. These components and their soldered connections are prone to leaks and explosions. Replace older components with new stainless steel or plastic-coated brass connectors.

HVAC. HVAC systems are also designed to last many years, and require updating only as-needed to address maintenance, repair, or replacement of worn or aging components. An effective inspection and maintenance program is essential to maintaining the system over the long term.

Roofing. A roof may last 15 to 30 years or more, depending on its type. If the roof is accessible, inspect regularly and make repairs immediately. Keep roof drains clear and direct rainwater away from the building. Inside, look for warning signs such as dampness or water stains. Any building 30 years old or more should be inspected for evidence of a needed roof update. Any roof nearing expiration of the manufacturer’s warranty should be scheduled for replacement.

Risks at habitational properties can be addressed with effective management and regular maintenance. An effective plan and an attentive property manager can prevent minor maintenance needs from developing into major problems.

And maintaining a strong management presence encourages tenants and residents to treat the property with respect.