Although there are rewards to owning an apartment building, there is also a lot of risk. With multiple tenants living in the building, there are many situations that could arise that will do damage to the property. There are many factors that affect how much insurance is needed to cover a building, which is why apartment building owners should speak to a reliable company about insuring their building.
Apartment buildings provide rental agreements for living spaces for individuals or families. They can be one-story or multi-stories and may provide additional amenities such as a gym, laundry, or a pool. There were about 20,830,586 apartment units in the United States in 2017, which is projected to grow as the population increases. The need for apartment building insurance will increase as well.
Why You Need Apartment Building Insurance
Apartment building insurance protects the owner against any liability claims and protects against lost rental income that might be incurred following an incident. Insurance will cover events such as storms and fires, tenant or visitor injuries, vandalism and theft, and lawsuits. There are several types of insurance that apartment building owners should consider to protect their investment. Insurance should cover not only loss on the building but also common areas, garages, pools, or other spaces within the complex.
Types of Coverage
Buildings usually represent a large portion of total assets, regardless of the size of the building. Insurance coverage should protect from potential loss or damage to the entire property, however, not just the building itself.
General Liability Insurance: The building owner is responsible for maintaining the areas around the building in addition to the structure itself. General liability insurance protects the owner from lawsuits resulting from injuries sustained on the property, such as a trip or fall.
Equipment Coverage: This type of coverage protects from the loss of income if mechanical equipment within the building breaks down.
Property Insurance: Property insurance kicks in if the building is damaged by a covered loss such as a storm, fire and smoke, or vandalism.
Umbrella Policy: This gives protection for any events that occur that are over the liability coverage owned. For example, if a claim or situation is more than the liability policy, the umbrella policy will cover the rest. General liability insurance only covers up to $1 million so anything over that would be the landlord’s responsibility.
Workers Compensation: When a service or maintenance worker is on the premises, injuries can occur from the work performed. Workers’ compensation will protect against any claims that a worker produces against the building owner.
It is very important that the apartment building owner has the appropriate amount of coverage on the property. The ISO Commercial Property Building and Personal Property Coverage Form is a standard form that reviews exactly what coverage is needed.
How Much Insurance Do I Need?
The amount of insurance depends largely on the specifics of the property. The age of the building and roof, how many units are included, and whether the building has other amenities such as a fitness center or pool should all be considered. Property exposures are dependent on the electrical, heating, air conditioning, and plumbing systems. Should you need to make a claim, a deductible will apply.