Risks Faced by Apartment Building Owners

 

The primary concern for apartment building owners is protection for the property itself from catastrophic events. Property insurance alone is complicated; your coverage and how much it costs vary greatly depending on the building’s location and type of construction and on several other factors.

Your apartment complex insurance also needs to protect you from liability claims and lawsuits as well as provide coverage for lost income (rent) after a covered loss. You need an experienced insurance agent, such as a Trusted Choice® agent, to help you determine how much coverage you need to ensure that you are protected.

Here are just a few of the risks that apartment building owners might face every day:

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• Fire, storms and other catastrophic damage to the property

• Liability for tenant, employee and visitor injuries

• Theft or vandalism

• Loss of rental income

• Libel and slander

• Advertising liability

• Discrimination lawsuits filed by disgruntled tenants or employees

• Allegations of fraud, misrepresentation and other intentional acts by employees

 

These risks can be addressed with just a few insurance policies tailored to your needs. 

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Basic Coverage for Apartment Building Owners

Apartment building owners need several business insurance policies to protect them from property and liability risks.

Commercial property coverage protects against the loss of your apartment building or buildings within a complex, as well as other structures such as garages, office space, common areas, fences, swimming pools and storage buildings. Your apartment building property insurance should also cover any additions or improvements that are completed or under construction, as well as any business personal property that is kept on the premises and used to maintain or service the building and grounds. The amount of coverage you need and the cost of coverage depend on a variety of factors including the following:

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• The age of your roof and mechanical systems

• The age of the building 

• The location of your building or complex 

• The type of building (e.g., high-rise, duplex, multifamily, etc.)

• The type of construction 

• The presence of a swimming pool, fitness center or clubhouse

• The presence of up-to-date security and fire protection systems

 

Remember that your property insurance coverage is subject to a deductible if you have to file a claim. If you own a multi building complex, does your deductible apply per building, or per occurrence? This distinction is important for you to understand and choose wisely when you purchase your coverage. 

Imagine that several buildings in your complex sustain hail damage and need roof repairs. A per-building deductible requires that you pay the deductible for each building that needs repairs before your coverage pays for the damage. A per-occurrence deductible, on the other hand, requires you to pay one deductible regardless of the number of buildings that sustain damage. 

Apartment building owners also need loss of income coverage. This important coverage reimburses you for lost business income (rent) if the premises is damaged by a covered loss (storm, fire) and results in a loss of income or suspension of operations while repairs are made to the property.

Commercial general liability insurance, or landlord insurance, protects against claims of actual or alleged property damage or bodily injury by third parties (tenants, visitors, repair persons, delivery persons, etc.). This is the type of coverage you need to protect you from lawsuits if a tenant or visitor is injured at the complex pool or gym or suffers a minor event like a slip, trip or fall on the premises. 

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Condominium Owners Insurance

A condominium owner’s insurance policy provides coverage for the owner of the individual condo unit or townhouse. They own the interior of the unit, and therefore need coverage for the portion of the unit they are responsible for insuring, as well as personal property and liability protection.

The condominium association master policy covers the outer walls and structure, roof, and all common areas, including hallways, banquet rooms, clubhouse and pool. Typically, the unit owner is responsible for insuring the walls and partitions within their own unit, including paint and wall coverings, trim, flooring, and all fixtures contained within the unit, as well as their personal property.

Condominium owner’s insurance also provides some unique features such as loss assessment coverage to cover costs assessed by the association following a loss that exceeds the amount of coverage or for which there is no coverage, or for the deductible following a claim. For instance, the association selected a $25,000 deductible on their policy and the roof of each and every structure is damaged in a hail or wind storm.  Each unit owner would be assessed a portion of the deductible so the roof could be repaired.  Most condominium owner’s policies include a limited amount of loss assessment coverage with the option to increase the limit.