Hub International has launched a new captive insurance program to serve as an alternative to traditional security deposits for real estate owners, operators, and managers of multi-family properties and/or commercial spaces.

The new HUB Tenant Default Captive Insurance is a landlord-controlled captive program that does away with the hassle of security deposits, lowering the barrier for prospective tenants to improve occupancy rates, while creating an additional revenue stream for property owners by allowing them to retain excess premiums.

Through the new product, each participating landlord within the captive gets their own unique program, where they are the beneficiary. The tenants pay a premium – which is a 1-2% add-on to rent, based on underwriting, Hub explained – instead of a security deposit. The insurance covers loss of rent, damage to individual units/apartments, and legal expenses involving eviction.

"Most landlords' number one concern is receiving rent payments on time,” explained Hub real estate specialty practice leader James Stuart. “When a tenant defaults, it can take months for landlords to regain their property and get another tenant into the space.”

“Our innovative solution, HUB Tenant Default Captive Insurance, acts as a safety net to protect our clients' assets, improve financial outcomes and mitigate unforeseen loss."

Hub’s Tenant Default Captive Insurance is currently available in the US, with a 2023 launch aimed for the Canada market, for properties with a minimum of 500 units.

Read more: Hub International acquires independent broker Jaimac Risk Management

Last month, Hub International acquired the broker Jaimac Risk Management. Jaimac is an independent insurance brokerage specializing in risk management and credit insurance.