By Jesse Herman, contributing editor
Distinguished Programs, an insurance program developer that specializes in products for the real estate industry, has unveiled a new national property and liability program. The goal: increase the availability of “market level” home insurance coverage for the affordable housing industry.
"We studied this market segment carefully and started writing the business with a limited number of agencies that specialize in affordable housing," says Carla Vel, Distinguished Programs' chief operating officer.
The program includes all-risk property, liability and umbrella protection. The focus: low-to-moderate income, privately owned, multi-family housing where more than 20% of the rental income is government subsidized.
This is a product that was tailored made to meet the needs owners face. A new feature is found in the Business Income portion of the policy. Unlike a standard property form, it covers loss of both rents and government subsidies. The program is underwritten by standard, A-rated carriers and is now available to independent agents and brokers in 46 states.
Vel went on, “Our data and experience indicate that this market segment has not been treated fairly by many insurers. Despite dramatic changes in the affordable housing industry in the past 20 years, underwriters are still reluctant to write these accounts. As a result, well-maintained properties with quality management and safety programs are often relegated to the E&S market. Owners are forced to settle for policies that offer "below-market" coverage.”
Subsidized housing does not necessarily mean “poor quality” as some assume. Requirements for subsidized housing vary depending on location and many people have earned the right for quality protection. In fact, some of these homes are in great shape and good enough to make some envious.
At Distinguished Programs, Judith Sigel explains, “We’ve been able to determine that there are segments of tax credit housing or subsidized housing that any of us would love to live in. A prime example of that is if you lived in Greenwich, Connecticut, and made $80,000 a year, you would actually be eligible for affordable housing,” she says. “Both local governments and the federal government are looking at affordable housing as a huge issue, and we see it as a great opportunity. Understanding the niche, under-standing what we can write and what we should never write, is an extremely valuable way for us to educate our underwriters about the products people actually need,” Sigel declares.
Distinguished Programs and their unique approach to the real estate industry have a great following with industry insiders who focus on affordable housing. It is becoming apparent that they have targeted a niche that needs it most and are doing so in a way that is profitable.
Kyle McKinney of the Global Insurance Company in Boston agrees, “Underwriters hear affordable housing and they think of the old housing projects. The fact is, in many cases you can’t distinguish affordable housing from market value housing. The trend today is toward mixed housing where affordable is a percentage. He went on to say, “Distinguished Programs is one of the few organizations that was willing to take the time to listen and understand the business.”