What to Know About Multi-Family Property Insurance
Multi-Family property insurance can be complicated at times because there can be so much to think about when it comes to making sure you are properly insured.
The last thing anyone wants is financial loss so knowing what to look for in regards to property insurance is essential. Here are some things you will want to know about multi-family property insurance that can help when your ready to buy insurance.
Know the Risks
As a building owner it’s important you understand your risks. Your primary concern will be with protecting your property from natural disasters or other catastrophic events. Things like fires, storms and flooding can cause extensive damage to your building. Liability for tenants, employees and even visitor injuries need to be considered when looking at insurance options. Theft, vandalism and loss of rental income are just a few of the other common risk factors multi-family building owners deal with. Things like advertising liability, discrimination lawsuits, allegations of fraud and invading the right to privacy are also things owners should inquire of when looking at coverage through their insurance provider. Property insurance can cover a multitude of things so knowing what to ask about can make all the difference.
Understanding Basic Coverage
Often times what building owners find is that they will need multiple insurance policies to cover them from property and liability risks. The most common coverage is commercial property coverage. This coverage protects against the loss of the multi-family residence and other structures on the property such as offices, garages, swimming pools and storage buildings. Anything that is associated with the property and used to maintain or service the properties grounds should be covered under this basic coverage policy. Factors that come into play when deciding on the amount of coverage a building owner will need as well as the cost are as follows: age of the roofing and mechanical systems, age/location and type of building, type of construction, security and fire protection systems and whether the premise(s) have a fitness center, clubhouse and/or swimming pool.
Another thing to note is your deductible. Basic coverage is typically subject to a deductible so make you are aware of what your deductible pertains to. A per building deductible will require your deductible for each building that needs repair before coverage covers damage. A per occurrence deductible only requires you to pay one deductible regardless of the number of buildings damaged.
Lastly, when a multi-family building has excessive damage your going to experience a loss of income for a period. Having coverage that covers this loss is huge as the repair process can take longer than expected. Protecting yourself from lawsuits that can potentially arise from tenants or visitors should also be considered when looking over your insurance options.
Study Your Options
There are other coverages that owners should at least look into before deciding on the policies right for them. Having every facet of your building covered is an asset for you so be sure to look into these when shopping for insurance.
Equipment Coverage- This coverage covers damage and potential loss of income when mechanical systems break down.
Commercial Umbrella Insurance- This insurance insures liability protection beyond your basic liability coverage.
Business Owners Policy- This policy is a bundle of commercial liability, property and business interruption.
Professional Liability Coverage- This coverage protects the owner from claims that they have financially harmed someone through negligence or error.
Workers Compensation Insurance- This insurance protects employees who work on the premises from the costs of work-related illnesses or injuries.
Commercial Auto Insurance- This coverage covers any autos owned by the rental property.
How to Avoid Liability Claims
Even if a claim is unvalid, it’s still important to ensure your covered as a multi-family property owner. Minimizing your risk is always a good idea. Ways you can do this is by having proper insurance coverage, keeping your property in good condition, staying compliant with health and safety regulations, promptly making needed repairs, removing any environmental hazards, having security on premises and being thorough with background checks, not discriminating others, not violating a tenants privacy and always communicating important information clearly.
There’s a unique set of risks when being a multi-family property owner. Understanding what you need to know about multi-family property insurance will help protect you from any potential losses.