Apartment Building Insurance Basics: What any Owner Should Know

As an apartment building owner or investor, there is an assortment of challenges and opportunities that we often face. Accordingly, any commercial property owner must have the right insurance policies to protect themselves and their investments from the risks that they face on a daily basis. Whether it’s a fire, leak, theft or even visitors slipping on your property, you want to have the right insurance policies in place to protect yourself and your investment from damages and lawsuits.

Before one jumps into this predicament, there are several things you should know before finding and purchasing the right apartment building insurance policy. Insurance for the actual damages to the building and property is only part of the equation. The apartment building owner must also look into the liability part of being an owner. The apartment building owner is responsible for accidents and injuries that take place on the property to tenants and visitors. So basically, your building insurance should have two parts. The first half of the policy will cover actual damages to the building and property, while the second half will focus on your liability as an owner. The liability insurance will include bodily injury and medical insurance that will cover the initial medical bills for the injured party. The liability insurance will also cover litigation fees if this becomes necessary. Here are some key business coverages that an apartment building owner should consider:

Business Property Insurance
This policy type covers your building location, as well as the contents, incise including furniture, fixtures, and valuable papers and records. Property Insurance for Commercial Real Estate usually falls into different categories.

Property Coverage:
Insures any damage to your building, apartment or condominium.

Personal Property Coverage:
Includes damage to your personal property on the premises.

Business Income Coverage:
Covers loss of rents due to an accident or a claim.

Ordinance Coverage:
will cover large costs of reconstruction if the building suffers substantial damage and must be rebuilt in compliance with new building standards.

Business Liability Insurance
This policy type protects you in the event a person injures themselves on your premises. Any apartment building owner should hold a minimum of $1,000,000 in Liability Coverage to protect themselves against injuries that happen on their premises.
Under Liability Insurance, an apartment building owner might also want to be protected against lawsuits for wrongful eviction, liable slander, and false advertising. These risks can be insured by a Personal and Advertising Injury Coverage under one’s Liability Policy.

Business Crime Insurance
This type of coverage is one that is often overlooked by Commercial Real Estate owners, but if effective it would provide coverage for the business if one of the employees is stealing or engaging in any fraudulent activities.

Worker’s Compensation Insurance
Just like any typical business, an apartment building usually employs personnel for everyday jobs. Whether related to clerical work or maintenance, it is required by law for the apartment owner to provide workers’ compensation insurance for all of its employees. Accordingly, worker’s compensation insurance provides coverage for injuries or illnesses suffered by employees resulting from hazards or accidents that may occur in the workplace. With Workers’ Compensation Insurance, the apartment building owner should educate its employees on potential workplace hazards and educate employees on how to reduce on-the-job injuries.

Umbrella Coverage
This type of coverage protects from above and beyond basic business liability insurance limits for general liability, auto and employer’s liability.
In addition to the above referenced policies that are recommended for any apartment building owner, there are other insurance plans that a property owner should consider also. Cover glass, appliances, parking areas, pools and saunas are all items that a building owner should consider in their insurance policy.
Whether a veteran apartment building investor with holding of several thousand units or just starting out with a few units, an apartment building owner should always have the right insurance policies to protect themselves and their investments against unforeseen risks.

P.J. Nabatian is the founder of e360 Insurance in Van Nuys, CA.