Protect Your Investment: the Importance of Apartment Building Owner Insurance

Apartment Building Owner Insurance

What can Apartment Building Owner Insurance do for you?

With over 20 million rental properties across the U.S. containing the 48.2 million individual units, 38% of the renters occupy these residencies in apartment styled, multi family buildings.

Now, that may already sound like quite the load of apartment complexes dotting our areas, but we still see new apartment buildings being built in what feels like all areas. 

In Oregon alone, we are witnessing the extensive rebuild of whole towns and communities following the wildfires-turned-urban-fires of the last many years. To put it in perspective, the Almeda Fire claimed more than 2,500 homes

The much needed rebuild of the highly impacted towns of Phoenix and Talent is set to give spaces to those affected families, but also faces the need to compensate for space for those newly moving in and around the state

With the expanded real estate devoted to these multi-family apartment buildings, the question arises- who has protected their investment with adequate coverage of apartment building insurance?

Keep in mind, this question arises because though we may assume all apartment buildings are owned by large real estate investment trusts, or REITs, they actually only own a portion, meaning there are still a number of non-REITs that operate these residences.

Regardless of who owns the apartment building itself, Apartment Building Owner Insurance provides the kind of protection needed to ensure its continued function following disaster and damage, no matter how common or uncommon the claim is. 

What is Apartment Building Owner Insurance?

So what is Apartment Building Owner Insurance and how is it different from other types of insurance?

Apartment Building Owner Insurance, also known as Landlord Insurance or Rental Property Insurance, is a type of insurance coverage specifically designed for individuals who own and rent out apartments or other investment properties. It offers protection for the building itself, as well as the income generated from the property. It essentially protects the physical aspect of owning a rental property but also the owner as both a landlord and business owner. 

This insurance is vital for apartment owners as it safeguards their investment against various risks and provides financial security in case of unforeseen events.

Why is Apartment Building Owner Insurance Important?

Owning a rental is often seen as a viable and potentially successful investment towards creating flows of passive income. We all want to make money without working, right?

Owning a rental that stands as a single unit is one thing, but what about the exponential profit potential when there are multiple units- math alone makes it seem like the route to go when it becomes an attainable option to pursue. 

As with all investments, though, there are pros and there are cons. 

Owning an extensive rental property with a large portfolio of many units to be rented to many individuals creates many potential risks– Apartment Building Owner Insurance helps protect the owner from the multitude of threats. 

In the vast coverage from hard assets (the building and physical features) to soft assets (the business of rental management), Apartment Building Owner Insurance is the uniquely fitting type of policy that crosses all the t’s and dots all the i’s. 

Apartment Building Owner Insurance

What are the Key Components of Apartment Building Owner Insurance?

As with many insurance policies, Apartment Building Owner Insurance includes several common key components:

  • – Property Coverage: This component protects the building and other structures on the property, such as garages or sheds, from covered perils like fire, vandalism, or severe weather damage. It may also cover the cost of rebuilding or repairing the property.
  • – Liability Coverage: Liability coverage is crucial for apartment owners as it protects them from legal claims or lawsuits filed by third parties who sustain injuries or property damage on the premises. It helps cover legal expenses, medical bills, or settlements in such cases.
  • – Loss of Rental Income: If an insured property becomes uninhabitable due to a covered event, loss of rental income coverage helps compensate the owner for the lost rental income during the repair or restoration period.
  • – Personal Property Coverage: This component protects personal property owned by the landlord and used in the management of the rental property, such as appliances or maintenance equipment.
  • – Additional Living Expenses: If an insured property becomes temporarily uninhabitable, this coverage can help cover the additional living expenses for tenants, such as hotel stays or temporary housing, during the restoration period.

In seeing the most common (and some uncommon) claims made by landlords, it’s clear why these elements are included in Apartment Building Owner Insurance policies. 

What are the Common (and Uncommon) Claims Made Under Apartment Building Owner Insurance Policies?

The most common apartment building insurance claims are typically related to water damage, fires, and theft. Water damage can occur from leaks, burst pipes, or natural disasters such as floods. 

To learn more about the extensive coverage sought to protect against these threats, check out the individual blog posts we have on Water Leakage or Seepage Coverage and Flood Insurance

Fires can be caused by a number of sparks- from electrical issues, to cooking accidents, to arson. 

Theft can happen from break-ins or vandalization. 

All in all, it’s important for landlords and apartment building owners to have the right kind of comprehensive insurance coverage that protects against these risks.

Other common claims include: 

  • – Liability Claims: If a tenant or visitor is injured on the property, the landlord may be held liable. Comprehensive insurance coverage can help protect against these types of claims.
  • – Mold Damage: Mold can be a serious problem in apartment buildings, especially in areas with high humidity or moisture. If left untreated, mold can cause health problems for tenants and damage to the building itself.
  • – Natural Disasters: While floods and the associated water damage are a common natural disaster that affects the apartment building or rental itself, other disasters such as hurricanes, tornadoes, and earthquakes can also cause significant damage to apartment buildings.
  • – Equipment Breakdown: HVAC systems, elevators, and other equipment in apartment buildings can break down and require costly repairs or replacement

The more uncommon claims include 

  • Damage caused by pets 
  • Pest infestation like that of bed bugs that cause a need for costly professional pest control services 
  • Tenant negligence

The most uncommon claims made range from damage caused by falling airplane debris, sinkholes, and even meteorites

How Can Apartment Owners Protect their Building and Rental Income Effectively?

Beyond the very necessary awareness of what is and isn’t covered in your Apartment Building Owner Insurance policy (and potentially what may or may not be falling from the sky), there are some additional steps you can take in practice to help protect your multi-unit rental. 

Some of those essential steps include:

  • – Regular Property Inspections: Conduct routine inspections to identify potential hazards or maintenance issues. Promptly address any repairs or maintenance needs to prevent them from escalating into more significant problems.
  • – Implement Strong Lease Agreements: A well-drafted lease agreement can protect the landlord’s interests by clearly outlining tenant responsibilities, property rules, and the landlord’s rights in case of damage caused by the tenant.
  • – Screen Tenants Thoroughly: Conduct a comprehensive screening process for potential tenants, including background checks, credit checks, and references. This helps reduce the risk of renting to individuals with a history of damaging property or failing to pay rent.
  • – Install Security Measures: Enhance the security of the property by installing robust locks, security systems, and adequate lighting. These measures can deter criminals and reduce the risk of break-ins or vandalism.
  • – Maintain Proper Documentation: Keep detailed records of property-related documents, including lease agreements, inspection reports, maintenance records, and communication with tenants. These documents can be valuable in case of disputes or insurance claims.
  • – Emergency Preparedness: Develop an emergency plan and communicate it to tenants. Provide clear instructions on what to do in the event of a fire, natural disaster, or other emergencies. Regularly review and update the plan as needed.
  • And of course, it’s always a good reminder- 
  • – Obtain Adequate Insurance Coverage: It is crucial to work with an experienced insurance agent to ensure you have appropriate coverage for your investment property. Consider the value of the building, potential risks in the area, and the income generated to determine the right level of coverage.
  • – Regularly Review Insurance Policies: Periodically review your insurance policies to ensure they adequately cover your property’s current value and potential risks. Consult with your insurance agent to make any necessary adjustments or additions to your coverage.

Apartment Building Owner Insurance

Additional Considerations for Your Apartment Building Owner Insurance 

Apart from the fundamental steps covered above, some additional considerations for apartment owners regarding their protection and coverage include:

  • – Umbrella Liability Coverage: Consider obtaining an umbrella liability policy that extends liability coverage beyond the limits of your basic landlord insurance. This additional coverage can provide additional protection in case of a significant lawsuit.
  • – Flood and Earthquake Insurance: Standard property insurance policies often do not cover damages caused by floods or earthquakes. Depending on your property’s location, it may be wise to explore additional coverage options for these specific perils.
  • – Landlord Associations: Joining a landlord association or network can provide access to valuable resources, information, and discounts on insurance policies. These associations often offer educational materials and guidance on property management and insurance-related matters.
  • – Professional Property Management: If you prefer a more hands-off approach or lack the necessary expertise, hiring a professional property management company can help ensure your investment is properly managed. These professionals can assist with tenant screening, rent collection, property maintenance, and compliance with legal requirements.

We all have the list of needs for our own homes– the laundry list of to-dos, what to be aware of, and the kind of protection we need for that place we call home. When it expands to owning a business and building that houses the homes of so many, that list can get longer. 

Having the right agent in your corner can make it that much easier to move through. With any questions, give us a call and ensure the right protection is provided. 

541.482.0831 Ashland

541.857.0679 Medford