Disaster Insurance Coverage for Multifamily Property Owners

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Some landlords rely on their homeowners insurance to cover their rental units. It is important to know that your homeowners insurance policy most likely will not cover damage to your rental property. It will also likely not provide coverage for liability claims. 

Furthermore, you need landlord insurance when you do not occupy the same residence as your tenant. You will also need landlord insurance if you are renting out your own home temporarily or sharing accommodations, such as your basement level, with a renter.

Do I Have to Have Landlord Insurance?

The law does not require landlord insurance, but you would be wise to carry it if you’re collecting rent and managing a property. Building fires, rain storms, tornadoes, vandalism, and liability claims are some of the key things you want to be prepared for as a landlord. If your property experiences $100,000 worth of damage and you do not have insurance to cover it, those costs must come out of your pocket.

Insurance Coverages You Should Consider

  1. Insuring to Value: Oftentimes, building insurance value is much lower than its true value. In the case of a large claim, you will suffer the co-insurance penalties.
  2. Rental Income: Can be obtained for any duration up to actual loss sustained for 12 months. We recommend the 12 months.
  3. Boiler/Machinery Coverage: Usually, it is not part of the package policy, but we highly recommend it.
  4. Excess Liability: Additional liability limits can be purchased in the form of an umbrella. We offer this at a discount to SPOA members.
  5. Hired/Non-Owned Auto Liability: Coverage for Hired/Non-Owned auto liability exposure. $1 Million limit is $90 per year.
  6. Backup of Sewer & Drains: Damage caused to your property due to backup. In most cases, coverage is left out.

Multifamily Dwelling Insurance: Recommendations

  1. Obtain Certificates of Insurance: Obtain certificates for contractors working at your property. (Liability – Workers’ Compensation.)
  2. Review Replacement Value: Review value and rental income of your apartment building annually as it could fluctuate from year to year due to labor, material costs, and economic conditions.
  3. Recommend Renters Insurance: Recommend to your tenants that they obtain Renters Insurance to properly cover their personal belongings and personal liability exposures.
  4. Liability and Workers’ Comp. Exposure: If you have a commercial or retail tenant, make sure you obtain certificates of liability and workers’ comp. coverage from them naming you (the landlord) as additional insured.

Thank you for taking the time to read our blog. Did you find our tips on disaster insurance coverage helpful?

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