10 Things You Must Know About Apartment Building Insurance

Purchasing an Apartment Insurance Policy

Landlords buy apartment building insurance in order to guard against several types of potential liabilities that they must face. Since the number, size and scope of apartment buildings around the country can be so incredibly diverse, the types of apartment insurance available and the coverage provided by each can be very different.

1. Actual Loss Insurance: Provides protection from vacancy for an apartment that sits unrented for a long period of time (up to one year). This insurance type is common among landlords, especially during times of a housing boom such as was recently experienced.
2. Mechanical Breakdown Insurance: For the handling of repairs or maintenance of the building’s heating and air conditioning equipment. Under the right weather conditions, this type of insurance in particular can be of significant use.
3. Building Ordinances: Complying with local and state laws regarding building codes and their many different types of violation can be very expensive and time consuming. Fortunately there is an insurance available to apartment owners, which will allow them to insure their building against the high fees or penalties that may come from being forced to comply with building ordinance laws.
4. Liability Concerns: Especially in our suit-happy society, apartment insurance owners must pay particular attention to concerns about liability which, under the wrong circumstances can even lead to losing the building to someone else.
5. Insurance to Value: With the steadily increasing price of building materials in the country and around the world, it is critical to make sure that your building is insured for the replacement value or very close to it in case of a total loss.
6. Number/Size of Units Matters: Obviously an apartment building consistig of many large units covering several dozen-thousand square feet is going to be more expensive to insure than your simple, one-unit rental above someone’s garage.
7. Age of Building: The older a building is, the more it will cost to insure, because the risk of loss is greater as time goes on. In addition, older apartment buildings may be lacking compliance with ordinances and codes that have been passed in recent years.
8. There is a Difference Between Apartments & Condos: One type of insurance is significantly more expensive than the other (Renters) due to the nature of the people using the building structure and their personal obligations
9. Insurance for auto liability: If your apartment complex is large enough to have vehicles on the property - even if they are the little electrical models - this will add to the amount of risk on your policy and increase the amount of your premiums.
10. Consider Commercial Umbrella Coverage: An umbrella insurance policy is available for landlords that can provide protection if the apartment building insurance policy fails to completely cover damage due to reaching its policy maximums. Commercial Umbrella policies are relatively inexpensive and a great way to get that extra peace of mind.

Insurance for an apartment building can be a major factor in determining the overhead costs for running an apartment building with active tenants living in it. Fortunately, however, if your neighborhood is active and easy to sell, it is easy to pass on the cost to the renters.