Property owners of multi-family units, in order to properly protect themselves from the various exposures they face, require landlord insurance that goes the distance. This includes securing Property and General Liability insurance designed for this unique niche market.
Commercial Property insurance provides essential coverage for owners of apartment buildings and complexes against loss from fire, theft and other perils. It covers the building itself and other structures on the property such as a garage, storage facilities, and common areas.
The amount of Property coverage a landlord/property owner needs to purchase depends on a variety of factors, including the age of the building; age of the roof and mechanical systems; location of the building or complex; type of construction; presence of a swimming pool, fitness center or clubhouse; and presence of up-to-date security and fire-protection systems.
It’s important that the building is insured on a replacement cost basis so that in the event of a loss, the damaged property will be rebuilt with materials of like kind and quality, without any deduction for depreciation. Equally important is having Ordinance or Law coverage as part of the Property policy, especially for older buildings, which are common in urban areas. Ordinance or Law insurance will cover the increased expenses to upgrade the property so it meets current building codes. In some jurisdictions, municipal ordinance or code may require that a partially damaged building be demolished. In such cases, with Ordinance or Law coverage, the insurance company will treat the claim as a total loss even though the building was only partially damaged. Additionally, Ordinance or Law will pay for the cost to demolish the undamaged portions of the building, if it is mandated by the building, zoning, or land use ordinance or law.
Property owners should also make sure Equipment Breakdown insurance is included in their Property coverage. This coverage will step in to cover losses to building machinery such as heating/cooling systems and miscellaneous electrical apparatus.
Depending on where the property is located, Earthquake and/or Flood insurance should be reviewed.
Securing the right amount of General Liability coverage in a landlord insurance program for multi-family units is essential to protect against casualty losses, including slips and falls on the premises and injuries at the property’s pool or gym for which the property owners may be responsible. The defense costs in negligence lawsuits add up quickly and settlements or judgments can run in the millions of dollars.
Distinguished’s City Homes Program provides a package product for small urban multi-family properties in designated cities across the country. For more information about our program, please visit here.