This year has been and will continue to be a different kind of year for residential and commercial property owners. Property owners with large schedules of property, like apartments, are facing new obstacles and risks they haven’t seen in recent years. Insurance carriers in markets across the country are pulling out, cutting capacity, adding exclusions and restrictions, and dramatically raising prices.
Apartment owners need to have the right commercial general liability policy, especially ones who own multiple unit properties. These policies will cover financial damages from defective property conditions and provide owners coverage if a lawsuit from a tenant occurs.
Common apartment liabilities and exposures
Tenant-landlord laws tend to differ in every state and even city. It’s always a good idea for real estate owners to review their state and city laws to understand liability risk.
- Dangerous conditions: Apartment owners must properly maintain common areas, warn tenants of hidden dangers, and make dwellings safe. Often, negligence does not need to be specifically proven. Tenants can show that the owner knew of the dangerous condition and either failed to repair or give warning to the tenant.
- Injury responsibility: When dangerous conditions are present, owners can be liable for injuries sustained by the tenant. Slip and fall injuries are common lawsuits (i.e., if a stairwell needs repairing), and tenants can sue for medical billings, lost earnings, emotional distress, etc.
- Miscellaneous: Most policies will cover damages from extreme weather conditions such as, rain, wind, and hail. Policies can also help with acts of burglary and acts of vandalism. Flood and earthquake coverage might not be covered, depending on the region.
- Liability Claims: Commercial general liability policies can cover the payment of damage awards in the event someone sues. However, if the damages exhaust a CGL policy, umbrella insurance can help cover the difference.
Apartment owners need to minimize risks
LLCs: Apartment owners should always separate their rentals and their personal finances. It will provide some protection in the event of a lawsuit.
Inspect the premises: Apartment owners should work to keep properties in great condition and regularly review a checklist to ensure proprieties aren’t deteriorating. CGL policies can often cover damages. Keep a list of complaints and repairs that were made. Tracking everything is critical in case of a lawsuit. Lastly, stay on top of updates.
Ensure workers: All repairers, contractors, and anyone else working for the apartment owner or company should provide certificates of insurance. This can reduce premiums and help if a claim arises.
Getting the right property coverage in a hard insurance market
Real estate owners and businesses should carry insurance coverage to protect and mitigate risks from owning apartment buildings. While most owners will invest in property and casualty insurance, commercial general liability insurance, and flood insurance, many lack an umbrella insurance policy.
Umbrella insurance provides rental property owners with excess liability insurance coverage beyond the limits of their CGL policies.
In a hard property insurance market, working with the right insurance carrier can make all the difference. McGowan Excess & Casualty (MEC) specializes in placing Excess and Surplus Lines CGL coverage for a wide range of businesses. Staffed by industry experts, we’re able to help commercial and residential property owners find the right coverage specifically designed for their unique context.
