What are the most important things to know about finding and buying apartment building insurance to protect your investment?
By Andres Dominguez III
As an owner of a multi-family apartment complex, you are exposed to different risks than a traditional single-family homeowner.
Events such as loss of rents and bodily injury lawsuits are more likely to impact your bottom line. Finding insurance to protect you from these risks is easy with an insurance agent you can trust. Whether your building is a triplex, fourplex, or hundreds of units, our team at Anderson Insurance Group has the knowledge, skills, and carriers to ensure you have the right coverage.
Here’s the most important things you should know about finding and buying insurance for your apartment.
What Type of Insurance Do Apartment Buildings Need?
A standard “Landlord” policy will not suffice for an apartment building.
You will need a true Commercial Property Policy because your apartment building is also a business. Due to the nature of this business, you have more liability and will want to ensure your policy has these essential coverages:
- General Liability
- Commercial Property
- Business Income (Loss of Rents)
- Ordinance & Law
General Liability Insurance
General Liability Insurance is a must-have for any business, especially an apartment complex.
It covers a wide range of incidents, such as negligence, and customer slip-and-fall accidents, and it can also cover you if a tenant or prospective tenant sues you for discrimination. This coverage will help cover your legal defense costs and any damages awarded. Failure to obtain adequate coverage could leave you with hundreds of thousands of dollars in lawsuits and medical bills.
Commercial Property
Property insurance covers the cost of repairing or replacing your building’s physical property if it is damaged or destroyed due to a covered event.
This can include fires, wind, hail, vandalism, and theft. As an apartment building owner, you may have several structures on your property such as garages, storage buildings, swimming pools, clubhouses, etc. These are also covered in addition to the main apartment building(s).
Business Income (Loss of Rents)
This coverage provides reimbursement for lost income and expenses for some or all of the time it takes to repair unit damages.
If your apartments are unrentable due to a covered event (such as smoke, fire, or burst pipes) that makes your unit(s) unrentable. This coverage can help you stay afloat during the recovery period and cover ongoing expenses such as debt service, utilities, tax payments, and payroll.
Ordinance & Law
The best way to describe an Ordinance & Law loss is that it’s a consequence of a covered loss.
A few years ago an apartment owner insured with our agency had a fire in his apartment building that was built in 1911 in a historic area of Salt Lake. The fire was started by a candle and caused damage to three units. The Salt Lake City building inspector would not give a permit to the building owner to repair the apartments directly damaged by the fire without bringing an undamaged part of the building to current electrical codes. This part of the building had been added to the original structure many years ago but the quality of construction was not to current codes and represented a fire hazard.
The insurance company paid $150,000 for direct damage to the three apartments and an additional $100,000 in Ordinance & Law coverage to bring the building to current electrical and building codes. Our customer even had to pay a small amount over the $100,000 to bring the building 100% up to code but regardless called to thank us for this coverage, his prior policy did not have any coverage for Ordinance and Law.
**Not all policies offer or include Ordinance & law and not all properties are eligible. Call our agency to have an experienced and knowledgeable agent review your current coverage to check for gaps in coverage such as these.
For more information on Ordinance & Law coverage, check out our article HERE.
If all this insurance and coverage terminology is making you dizzy, please contact our team HERE. We would be happy to explain Apartment Insurance in more detail and we would be happy to review your current coverage and offer you a new quote.
About the Author:
Andres has been consulting Utah Rental Owners and Entrepreneurs for over 8 years. He is a graduate of Salt Lake Community College and the University of Utah, where he studied Marketing. He is driven by his mission to render the highest level of service, provide the best coverage available, and build meaningful relationships. When not serving his clients, Andres enjoys running marathons, practicing martial arts, and snowboarding.
Call: 801-262-1551 Text: 801-758-9046
Call us for more information on renters insurance and any questions you have about land lording, we love helping our customers be successful Utah landlords. Call our office at 801-262-1551 or Click Here for a for a consultation with our experienced team. Find out more about renter’s insurance.
For a full review of your apartment or rental property insurance, contact a knowledgeable Anderson Insurance Group agent today.
