Entrepreneurs who invest in apartment complexes should get apartment building insurance to minimize risks. No one insurance solution fits all property owners. Each policy must be customized. Here are some important points about commercial insurance and apartment building insurance that property owners must know.
Commercial Insurance Overview
Apartment building insurance falls under the broader umbrella of Commercial Insurance, which is one of two common types of business insurance besides General Liability. Commercial building owners must remember that they need to protect their assets against liabilities. Any property owner can get sued by a tenant for numerous reasons, but having the right insurance in place can keep legal fees under control.
Basic protection plans cover incidents such as natural disasters, injuries to employees or tenants, theft, and vandalism. The plan may cover various other situations, from libel and slander to advertising liability claims. The amount of coverage you decide for your business should be based on factors such as budget and number of employees.
Insurance for your building will depend on several physical factors, such as the building's age and location. The types of construction and roofing systems will play a role in building insurance rates. A high rise will cost more to insure than a duplex. Different types of property, such as a swimming pool or fitness center, require their own coverage. The property lease should specify who is responsible for insuring the building. In most cases, the landlord pays for building insurance and may pass on the costs to tenants.
Per-Building vs. Per-Occurrence Deductibles
If you own several buildings, you have a choice of buying either a per-building deductible or per-occurrence plan. With a per-building deductible, you pay an out-of-pocket deductible for each building until coverage kicks in. However, a per-occurrence plan allows you to pay one deductible regardless of the number of buildings damaged.
California Commercial Insurance Limits
Operating a business in California requires an understanding of the state's regulations and limits on commercial insurance. These regulations are overseen by the California Department of Insurance, which monitors over 1,400 insurance companies. The CA insurance department works with consumers to crack down on insurance fraud.
While the state does not require commercial liability insurance, it's still essential for businesses to be well protected from lawsuits, which are not capped in the state. Ideally, each renter will carry their own renters insurance that covers their personal items and liabilities. Some apartment complex owners require tenants to carry renters insurance to further shield themselves from litigation.
The only type of insurance that businesses must carry in the state is workers' compensation if they employ a salaried or hourly staff, even if it is just one employee. The employer must pay benefits to workers if they are injured or become ill in the workplace. All other types of commercial insurance are up to the business owner. Some of the different types of insurance may be for cybersecurity, commercial vehicles, flood protection, and contractor equipment.
Commercial Property Programs
Apartment building complex owners can benefit from commercial property programs, such as the standard ISO Commercial Property Building and Personal Property Coverage Form. This policy is flexible to meet the needs of a business as it allows for various endorsements that affect coverage. You can decide varying levels of coverage, such as for debris or pollutant removal. Commercial property programs can be tailored for companies depending on location, structure, and other factors. The programs are ideal for large complexes with tenants who invest in expensive computing equipment.
Renters Insurance Fills in the Gaps
When renters buy renters insurance, it reduces risks for both the renter and the property owner. The apartment building insurance may cover most of the contents in the building, but not certain items like unique jewelry that's difficult to appraise. A renter can submit a list of their belongings to their insurer to ensure coverage. The renter should find out what the apartment building insurance covers so he or she can plan the rest of their coverage accordingly. It's best to talk with an experienced insurance agent and ask questions about specific items to ensure coverage.
A landlord who is careful about screening tenants often requires at least $100,000 of renters insurance to move in. This coverage protects the landlord if the tenant is unable to make a monthly rent payment. A renter can raise the coverage limit to $500,000 for not much extra monthly cost. One of the key benefits of renters insurance is that it can save a renter from getting sued by multiple tenants if they accidentally start a fire due to negligence. Since the average annual cost of renters insurance in California is just under $200, it's worth it for renters to get as much coverage as possible.
Learning More from Your Insurer
The basic formula for calculating building insurance costs is to add up the building's value and its contents and multiply it by a risk factor. Your insurance agent can give you further details on how your premium is calculated. One of the keys to lowering your premium is to reduce risks, which might involve installing a video surveillance system.
Business insurance is much more complex than personal insurance since many more risks are involved. For example, insuring a business establishment usually involves protecting more people and more equipment. However, like any type of insurance, there are limits to the kind of coverage offered unless you customize it.
Apartment property owners invest in apartment building insurance as a safety net against lawsuits. In California, there is no limit to the amount people can sue a business, so it's important to get sufficient coverage. Contact the experts at
Fuller Insurance today in Southern California to learn more about getting the appropriate coverage for your needs.
