Building owners in the US, whether they own apartment complexes or single buildings, face several financial and other risks that can be reduced by insurance coverages. According to a report by the Insurance Information Institute, insurers get about 40 claims each year for property damages due to strong winds and hailstorms and 350 claims due to fire and other accidents. This apart, about 900 homeowners raise liability claims due to physical injuries or property damages caused to others.
63.9% of buildings are occupied by the owners in the USA and 60% of homes are underinsured, as per a report by Policy Genius. Clearly, insurance is essential. But what cover to buy? Everyone should buy at least three important coverages as far as we can say!
The commonest and the most popular insurance cover for apartments, the property insurance covers several means of damage mentioned in the policy. From accidental fires, smoke and windstorms to lightning, thefts, vandalism, vehicle or aircraft damages and riots, explosions, this insurance cover ensures maximum financial security for apartment owners. Numerous other incidents can cause damage to the structure, and you should talk to your insurer to plan well and prevent unpleasant surprises when you raise a claim.
Some of the key benefits of this coverage have been explained below:
- Special form coverage – The product covers most of the unfortunate incidents that may lead to damage in the basic structure and contents of the building. You can both secure your building and valuable assets with this coverage. Anything that isn’t specifically excluded by the policy is covered so focus on the exclusions to get a better sense of what is covered.
- Low premium –Most of the property insurance coverages come at comparatively lower rates of premium than others.
- Timely payouts – If you raise a claim for damages by covered accidents and disasters, you will usually get on-time payouts, as this is a simple cover that is well understood by most.
- Reduce stress – With this insurance in place, you get to reduce your stress!
General Liability Insurance
This is the second-most important coverage that you should consider investing in. This cover protects you from liabilities and legal suits, in case you cause damage to others’ properties or physical injuries that occur on your building premises. Areas like the lounge, swimming pool, hallways, common corridors, gyms, parking lot, and others are public spaces that are used by many people, who may or may not be residents of the building. If any of them suffers from injuries or damage to personal property, you may be held accountable for the same. This cover will then protect you from lawsuits by paying legal fees and medical expenses if any. For example, if someone’s car gets damaged by a faulty garage system, or someone breaks his/her hand by falling on a broken tile, this insurance cover will help you address the compensation.
Let’s sum up some of the benefits of this insurance to provide you with a clearer picture:
- Legal fees – The legal fees of lawsuits can add up fast, especially when you aren’t prepared for the same. With liability insurance, you can pay the fees of your lawyer to defend you in court or otherwise.
- Medical expenses – When anyone gets severely injured on the premises of an apartment you own, you may be required to pay the medical expenses of that person, if your negligence is found to be the primary reason behind the accident. The insurance will be able to cover these costs.
- Repair/Replacement costs – Damage to someone’s assets, like a car, can lead to financial problems for the person, and if you’re responsible for the accident, the liability insurance can help you pay for the repairs or replacement.
Business Income Insurance
Suppose you have to run repairs in the building after an accident, e.g. fire, you may have to say goodbye to your tenants for some time. In that scenario, you’ll be without rental income for some time. The business income insurance could cover that loss, while your building is getting repaired and renovated.
The key benefits of this insurance are:
- No-stress income – It will obviate the need for you to seek other sources of income during the lull and relieve a lot of stress.
- Repairs – Prevent a massive financial loss. The insurance will cover for you so you won’t be left without income for the time that the building is under repair. There are conditions of course so please refer to the policy form for details.
However, it’s important to note that the restoration time may have some limits, and you should have a detailed discussion with your insurer to acquire sufficient information about it.
Some specialized forms of property insurance may include covers from natural disasters, like floods, earthquakes, water damages, and those caused by objects falling on the building. You may need to extend the cover to include these incidents, which your insurer can tell you better. The better covered your building is, the better protection your tenants will get, so buy the right products after getting informed about their utilities.