Insuring any piece of property can be a difficult undertaking, but apartment complex owners often face even more complex challenges. It is especially important to become familiar with commercial lines insurance, which covers a variety of property and casualty insurance solutions intended specifically for businesses.
Commercial lines insurance essentially covers businesses from losses that they wouldn’t cover otherwise. They generally enable companies to continue operating even during high-risk periods. These types of policies fall under the category of property-casualty insurance, which also includes personal lines.
Commercial lines make up about 50% of all property-casualty insurance in the United States. These insurance policies are generally intended for businesses. One of the hazards that commercial lines cover is builders’ risk.
Apartment complex owners face many liability and property risks. This is why it is important to ensure that they have the appropriate type of insurance. Some of the most helpful insurance coverages for apartment owners to consider are:
1. General liability
General liability is one of the most common types of insurance among property owners, and for a good reason. As an apartment complex owner, you are responsible for maintaining the building’s common areas, including the halls, lobbies, reception areas, and even the parking lots. If anyone gets injured in any of these places, you may be held liable.
This is where general liability insurance comes in. This type of insurance covers the cost of settlements and legal fees if someone files a claim against you for personal injury or property damage.
As you might know, facing a lawsuit can be an expensive proposition. Apart from the legal fees, you may also be required to pay the person who filed the claim if the court rules against you. Without the financial coverage that general liability provides, the resulting expenses can be considerable and drive you to bankruptcy.
2. Property insurance
It would help if you also considered getting property insurance. As the apartment complex owner, this can be a significant expense. Even so, it is a worthwhile price to pay to protect your investment.
Property insurance covers the cost of repairs or renovation if all or part of the structure incurs damage due to a covered risk. It can help restore the value of your building and offset any financial losses. This type of insurance is essential given the many potential incidents that could damage a structure.
Of course, the usefulness of a property insurance policy depends largely on the types of losses that it safeguards against. Most plans cover the following:
- Fire
- Smoke damage
- Lightning and storms damage
- Vehicular damage
- Aircraft damage
- Explosion
- Property damage caused by riots
- Vandalism
As with all insurance policies, knowing which potential losses are covered is vital to ensure you are protected if or when an unfortunate incident occurs.
3. Business income insurance
This type of insurance covers you from potential liabilities if your apartment tenants somehow had to vacate the premise because of a covered loss. These include the events mentioned above, such as fire or storm damage.
In such cases, you would normally incur the financial loss of not collecting rent. After all, you can’t very well expect to charge rent for an apartment unit that your tenants can’t occupy!
Without business income insurance, the loss of rent could be a significant financial blow. But with proper coverage, you will be reimbursed for the lost income you incur while your apartment units cannot be lived in. This policy usually covers you for as long as repair work is ongoing.
4. Umbrella insurance
As useful as liability insurance is, it does have limitations. Despite the financial protection that a liability policy provides, you may face a future claim that exceeds its limits. You will have to make up the difference out of pocket when this happens.
This is why many apartment complex owners obtain umbrella insurance in addition to the standard policies that most property owners get. This type of insurance essentially kicks in and covers additional claim amounts that your liability policy won’t cover. In essence, you get extra liability insurance that augments your other policies.
Other helpful insurance policies for apartment owners
It is generally better to have more‒rather than less‒when it comes to insurance. Although you don’t necessarily want to pay for insurance that you will never use, it is advisable to look into getting other types of coverage for the following:
- Crime
- Employee theft or fraud
- Equipment breakdown
- Directors and officers liability
- Errors and omissions
- Cyber liability
By determining which risks are more likely to affect your business, you can better decide which policies are right for you.
About Snyder Specialty
Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.
