Victor’s Insider Scoop on Basic Guidelines for Insuring Your Apartment
November 11th, 2012 | top of page

You’re about to close escrow on a new multi-family investment and you’re shopping for an insurance policy to protect your investment.

Here are a few Guidelines you’ll want to follow to ensure your apartment insurance policy can be underwritten by a Preferred Carrier (an “A” rated company with stable financial backing).

The complex needs one of the following types of supervision:
A full–time resident manager, or
• An owner residing in the complex, or
A full–time property management company with a minimum of three years experience.

The property must have adequate protective measures to detect fires, especially in laundry rooms.

Smoke detectors and/or heat detectors are required in all units (especially in and near sleeping areas), common areas, hallways and high hazard areas such as laundry rooms, trash chutes and compactors. Hardwired detectors with battery back-up and central station reporting are preferred. A formal Battery Replacement Program must be in place.

Any buildings over three stories must have an emergency evacuation alarm and enclosed 2-hour fire rated stairwells.

Apartments that are more than six stories should have a complete sprinkler system. The water supply to the sprinkler system should be regularly tested and booster pumps provided if necessary.

The complex must sustain a minimum occupancy rate of 80 percent if it’s to be insured by a Preferred Carrier. Vacancies greater than 80% means greater risk for the carrier resulting in more costly insurance premiums for the complex.

It’s a good idea to make sure your policy is written on a Replacement Cost Basis which means you’re covered to fund reconstruction of any damaged or destroyed apartment buildings on the premises using comparable materials of a quality similar to those that were destroyed.

Also make sure you have coverage for Business Income and Extra Expense. This replaces income that is lost due to suspended operations caused by damage at your complex from a covered cause of loss.

For additional Guidelines or more information on insuring your multi-family complex, eMail Steven Bernstein of Summit Insurance Advisors or call him at 480 214.3544.

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