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Does your apartment building have the right insurance?

6/19/2015

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Does Your Apartment Building Have the Right Insurance? Written by Landlord Property Management Magazine on June 3, 2015. Posted in Blog

When you’re a landlord and in charge of an apartment building, one of the things you really need to do is protect your investment. There are a lot of different ways to do that, and one of the best and most important is to have good insurance. Do you have the right insurance for your apartment building? If you’re a new landlord, and managing (or just owning) an apartment building is new to you, it’s possible that you don’t have enough coverage. It’s also possible that an insurance agent sold you too much coverage, and you’re paying for something you don’t really need to be paying for.

You also have to consider what, exactly, your insurance policy covers. It’s got to handle everything that can realistically happen, or you could end up being sued and/or owing a lot of money to tenants or others who are hurt on your property. Having enough liability coverage is very important, and a good insurance agent can help you determine whether you have what you need or whether you’re putting yourself at risk by not having a policy that is high enough in coverage or comprehensive enough in scope to protect you.

The requirements for insurance will likely be different depending on your state and your specific situation, but that doesn’t mean you should just leave everything to your agent. Ask questions, and make sure you get some real answers. Actually read your policy, and understand what you’re covered for. The more you know about your actual coverage, and the laws when someone tries to sue you, the better off you’ll be and the safer you’ll feel. Owning an apartment complex is a serious business, and it’s vital that you treat it that way to protect yourself and your tenants.

Insurance is a big part of that, and it’s very different from standard homeowner’s insurance. Landlord insurance typically covers property damage, liability, and loss of income. There are some companies that provide landlord coverage that does not include tenant damage. These policies only handle things like break-ins and natural disasters. While that can be enough coverage for a single-family home rental in many cases, it’s often not acceptable for an apartment building, where damage from tenants could easily run into the thousands of dollars. That could far exceed any security deposits, and leave you on the hook for the rest of the repairs. Be sure to ask whether your policy covers damage done by tenants.

It’s also a good idea to ask your insurance agent what you can do to keep your costs down. Some landlords, for example, put in sprinkler systems, security systems, and other protective measures, so they can get a discount on their insurance. Since these systems can be expensive – and sometimes difficult to install in a large apartment building – it’s always a good idea to weigh the costs carefully and find out how much you’ll actually be saving before choosing to add something like that to your property.


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