Apartment Building Insurance

Types of Coverage Options All Apartment Building Owners Need

While owning a residential rental property and being a landlord can be both personally and financially rewarding, apartment building owners take on a great deal of risk. Without the right apartment building insurance, owners can face serious financial harm if something goes wrong. 

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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:

  • 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. 

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:

  • 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 multibuilding 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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Other Coverage Options for Apartment Building Owners

Talk to your Trusted Choice agent about the following additional types of apartment building insurance that you may need.

  • Equipment breakdown/boiler and machinery coverage covers damage and loss of income caused by a breakdown of covered equipment, such as steam boilers and other mechanical systems.
  • Commercial umbrella insurance provides excess liability protection for events that exceed the limits of your other liability coverage.
  • A business owners policy (BOP) bundles commercial liability, commercial property and business interruption coverage into one affordable policy designed for small businesses.
  • Professional liability coverage, or errors and omissions insurance, protects apartment owners and landlords from claims that they have financially harmed someone due to professional negligence or errors.
  • Workers’ compensation insurance protects employees who work on the premises from the costs of work-related illnesses or injuries.
  • Commercial auto insurance covers any autos owned by your rental property business, such as shuttle buses or maintenance trucks.

Tips to Avoid Liability Claims

Apartment building owners are often the subject of liability claims and lawsuits. Even if a claim is unfounded, one lawsuit can cost you significantly just to defend yourself.

Here are some tips to help you minimize your risk of lawsuits from tenants and other visitors to your apartment building.

  • Have proper insurance. A tenant can sue you if you do not follow proper eviction procedures or make illegal entry into a unit or if a person on the premises is injured because of dangerous conditions. Liability insurance covers the cost of litigation (attorney fees, court costs) and pays the damage award if you are sued.
  • Keep your property in good condition. In many states, landlords are legally responsible for any failure to keep tenants safe from dangerous conditions on a rental property. Stay compliant with all health and safety regulations, and make repairs promptly.
  • Remove environmental hazards. Environmental hazards, such as lead paint, radon and carbon monoxide, should be removed from your property as soon as they are discovered.
  • Make security a priority. Courts have found landlords partially responsible for crimes that occur on their properties if they did not provide adequate security. Take safety seriously, and carefully screen potential tenants and employees.
  • Don’t discriminate. The Fair Housing Act prohibits a building owner from refusing to rent to a tenant for reasons of race, religion, gender, national origin, disability or family status. A tenant or potential tenant who believes that his or her civil rights have been violated can sue you, and even if you are innocent, it will cost you time and money to defend yourself.
  • Never violate a tenant’s privacy. You are required to give 24-hour notice before entering a rental unit.
  • Communicate important information. Tenants must be notified of important (and potentially dangerous) information about the property, such as the presence of mold or the presence of a sex offender living in the complex.

While you must have general liability coverage to protect yourself from lawsuits, not every type of claim is covered. Be sure to understand what is covered and what is not covered by all of your apartment building insurance policies. 

How to Find the Best Insurance for Apartment Building Owners

Apartment buildings present a very unique set of risks that owners must insure against. With the help of an experienced Trusted Choice insurance agent, you can find the right mix of property and liability coverage to protect your assets, even in the worst of times. Find a local agent now.

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