Owning apartment buildings is often a lucrative and rewarding business opportunity. Risks, however, can threaten your property, endanger the lives of your employees and residents, and potentially interrupt your income stream. Apartment owner insurance will protect you in case something goes wrong and give you the peace of mind to run your business.
Apartment owner insurance protects you from a wide variety of the risks that you face, stemming from weather events and natural disasters, the improper acts of others (theft, vandalism, employee misconduct), and potential claims from injured or disgruntled residents. On any given day a fire could break out, your building could be burglarized, a resident could get injured and sue you, or an employee could make a mistake resulting in a claim against your business.
While the law doesn’t require you have to insurance, any real estate loans you may have on your property will mandate it. But more importantly, it’s a business need. You have a sizable investment in your apartment(s). You need to protect yourself from the value of the building, any claims or lawsuits you may face, and your income stream. In the event that the building can’t be rented due to damage or repair, the apartment owner’s insurance can offset your loss.
Like most types of insurance, the cost is far lower than the amount of one major loss, so having an apartment owner’s insurance is an absolute must. But, the amount of coverage you need will vary and we can work with you to make sure you have the right amount.
Apartment owner coverage is broken down into three major areas: Commercial property coverage, commercial general liability insurance, and loss of income coverage.
|Commercial Property Coverage||Commercial General Liability Insurance||Loss of Income Coverage|
In terms of what is not covered, there are a few areas to consider:
Unfortunately, there isn’t an easy average we can point to because apartments and apartment buildings vary so much. Major factors include:
If you own several different types of properties in varied locations, your average cost may go down as the risk is spread out among the asset pool. The best way to understand your specific costs is to discuss your needs with an agent.
As you are reviewing the risks and potential mitigation strategies for your apartment business, there are a few additional areas to think about. Many of these will not be covered by the areas discussed above:
The process of filing claims is essentially the same for apartment owner insurance as it is for other types of insurance. Should an incident occur, you begin by contacting your agent and requesting to file a claim. An adjuster will be assigned to evaluate the damage or other claim, and then work with you to provide a payout amount. The payout will be reduced by the amount of the deductible.
An apartment business can have many complexities in terms of the number and type of properties, the number of employees, equipment, and other considerations. The insurance you select should protect not just the physical assets but also your business as a whole, and the potential for risk can add up quickly. Given this wide scope, it’s best to start by talking to an agent about your needs and then working with him or her to review options and craft a policy that meets your needs.
After the initial selection is made, it’s important to update your insurance as your portfolio and needs change. Our agents can help review your policy periodically to make sure your rates are competitive and help you take advantage of new insurance products that may have entered the market.
Does landlord insurance require a deductible?
Yes, you are required to pay the deductible amount before your coverage takes over. You can determine the amount of the deductible when you select your policy. A lower deductible will mean a higher premium and vice versa.
Does the landlord insurance cover my property in case of a flood?
No, flood insurance is a separate policy.
Can trespassers hold me liable for injuries suffered on my property?
Yes, a visitor, passerby, or a trespasser could sue you if they are injured on your property, even if their presence violates your guidelines or policies. An example of this might be a resident’s guest slipping near the pool and suing you for medical expenses.
In my capacity as an apartment owner/landlord, can I require my tenants to maintain renter’s insurance? Can I require a certain amount of coverage?
Yes, and this may be considered a best practice. Making sure that your tenants have insurance helps to mitigate your risk. You may require insurance as well as minimum coverage amounts. All of these stipulations should be made in the rental agreement.
How does loss of income insurance work?
Let’s say that one of your apartment buildings is damaged in a tornado. Fortunately, no one was injured, but the building will require significant repairs that could extend up to three months. During the repair period, the entire building is uninhabitable and therefore cannot generate rental revenue. Your commercial property insurance will cover the cost of the repair work but would not cover your lost income. You could, however, file a claim against a lost income policy and receive payments during the repair period to offset the lost revenue. The specific terms and payout amounts are subject to your policy details, and an agent can guide you through making those decisions.
Will an alarm system and/or fire sprinkler reduce my insurance cost?
Yes, properly functioning safety equipment like this will reduce the cost of landlord insurance.
Should I be concerned with cyber liability?
Cybercrimes are increasing in frequency and scope. If you are storing customer information such as name, phone number social security number, dates of birth, and other potentially sensitive data in your capacity as an apartment owner/landlord, you could be at risk for having that information stolen and/or misused. Such a criminal act could potentially create liability for your company. Discuss your potential risk with a Texan Insurance agent and determine if insurance makes sense.
Can I add umbrella insurance to increase my coverage?
Yes, umbrella coverage can be an effective additional coverage to protect you beyond the coverage limits of your other insurance policies. It can help with lawsuit judgments and legal fees, as well.
Is landlord insurance tax deductible?
Yes, it is a legitimate business expense and is therefore deductible.