Frequently Asked Questions
Should I consider higher liability limits?
Yes. You should always purchase as much liability coverage as you can afford. You never know how high a jury verdict can come out, so it’s worth looking into purchasing higher limits. The typical liability claim results from slips and falls on the sidewalk, but also think about your tenants and their guests going up and down the stairs, which has the potential to become a very large claim. Some of the largest claims we’ve seen have come from seemingly minor incidents.
Don’t jeopardize your cash flow in your property to save a couple of dollars now. Purchase as much as you can before disaster strikes.
How much coverage should I purchase?
As much as you can afford. This is especially true if you own the building under your personal name, which means all your personal assets are on the line if you’re brought into a lawsuit. If you own the property under an LLC, you stand to lose not your personal assets but your investment itself – and why would you risk losing your investment entirely when you could protect it for quite a small amount of money each month? We’ve seen people lose properties worth millions because they were gunshy of an additional $50 a month. Please don’t let this be you.
What liability deductible is there?
Our program has no liability deductible for the vast majority of our policies. Some policies with special circumstances will require a very small one, but your average building owner is unlikely to have one under our program.
Do you recommend any other liability coverages?
Yes, there are a variety of liability coverages we would strongly recommend to building owners. The liability coverages in this program and the majority of carriers in the market cover property damage or bodily injury to other people, but there are many exclusions found in the marketplace where coverage is available. Here is a small list:
- Lead Liability – The majority of property insurance carriers have either limited or excluded lead liability coverage. In buildings built prior to 1978, there is a greater risk of lead-based paint having been used in the building, and we recommend you add this coverage separately if you own such a building. Coverage starts around $1,500 annually.
- Pollution Liability – We believe all apartment building owners should have this coverage whether or not there is an oil tank on the premises. Coverage starts at $300 annually for a limited policy.
- Tenant Discrimination Insurance – There are programs available to cover claims brought for Tenant Discrimination, Harassment, and Wrongful Eviction. If a tenant manages to convince a court that you were prejudiced against them for reasons of race, color, religion, age, gender, disability, pregnancy, sexual orientation, or national origin, you could be facing a ruinous lawsuit. Premiums start at $1,850 annually.
- Mold Liability – The majority of apartment insurance policies in the marketplace contain a ‘mold liability exclusion’, which means that if a tenant claims they received an illness from mold in their unit, you will not be covered against that claim. You can get coverage on a standalone policy starting at $2,500 annually.
Do I need lead coverage?
It depends on the type of building you own. Lead-based paint was no longer permitted in residential dwellings after 1978, so in general we do not recommend this type of coverage for buildings constructed after that date. If your building was built before 1978, you may need lead coverage – and in some other circumstances as well. In general, we’re looking for lead paint that was used commonly before 1978, but lead can also be in stairwells and common areas in other building materials. Lead pipes are also a potential culprit. Please contact one of our agents directly for a proper assessment.
What is equipment breakdown coverage?
Equipment breakdown coverall is not a warranty policy, and you may previously have encountered it under its more traditional title of “Boiler and Machinery Insurance.” This type of coverage take up where standard commercial property forms leave off to cover losses from mechanical or electrical breakdowns specifically of various types of equipment, such as the traditional boilers and machinery, but also computers, air conditioning units, and other types of equipment, which will vary depending on the type of company you operate (a more complete list is included below). The coverage kicks in when certain types of breakdown occur and cause damages, such as a mechanical breakdown, electrical arcing, artificially generated electrical currents, centrifugal force, or bulging, cracking, or collapse of pressure vessels.
Here is a more extensive, though not all-inclusive, list of types of equipment that could potentially be covered. If you commonly use a type of machinery not on this list and would like to find out if Equipment Breakdown Coverage might be relevant to you, please call us directly.
- Air conditioning and refrigeration
- Electrical equipment
- Computers and telecommunications
- Business equipment
- Production machinery
- Computer-controlled machines
- Security systems
- Retail “point-of-sale” systems
- Ventilation systems
- Elevators and escalators
- Hot water heaters
- Motors and pumps
Are my rents covered?
If your building is damaged and your tenants can no longer occupy the building, then yes, we will recommend a policy that will cover the lost rent during the normal time it takes to repair the damage and allow your tenants to re-occupy. There are usually limitations written into your policy to ensure that renovations don’t drag on forever, and your policy may cover a slight extension beyond that to cover the loss of rental income while tenants re-occupy – though of course, finding new tenants or persuading your previous ones to re-occupy is entirely your own domain.
If my tenants’ belongings get damaged, do I have coverage?
Typical leases usually require tenants to be responsible for their own items. The landlord’s building policy covers the structure only, including the contents of the apartment that the landlord has provided (for example, the stove and refrigerator) but not the tenants’ personal belongings. There may be very small coverages that allow a token amount for the tenants’ belongings, but in general we recommend landlords advise their renters to have their own insurance or, in a best-case scenario, require their tenants to purchase their own renters’ policies. We also recommend consulting with an attorney to review your current lease policies. You may wish to modify them to clarify that the tenant is responsible for their own personal items.