How about that call no landlord wants to get? The one where the tenant just came home from vacation to find that a pipe in the laundry room burst and now there are three levels with water damage?
Yuck.
Or how about the one from the fire department? *heart skips a few beats*
You want to be well insured… but multifamily insurance costs so much! What can you do to mitigate it?
7 Steps to Follow
1- Property Maintenance and Safety Measures: Insurance companies prioritize well-maintained and safe properties. Regular maintenance to catch small things with the potential to turn into big things will result in a long-term better outcome for the building, as well as lower rates for you. Anyone who has walked their property to find the tenant has removed smoke detectors can attest to the simple fact of doing regular safety checks.
- Document any updates, changes, and improvements you make, and preemptively provide them to the carrier to demonstrate your attention to this important detail.
2- Risk Assessment and Mitigation: Insurance companies conduct a thorough risk assessment before insuring an apartment building. Property owners who proactively identify and mitigate potential risks (such as fire hazards, structural weaknesses, or environmental concerns) are viewed more favorably.
- If you accept pets, make sure you have a dog policy that is followed by all tenants, and a rider on your insurance to this end.
3- Occupancy and Tenant Screening: The type of tenants you accept and occupancy rates you maintain are critical considerations for insurance companies. Properties with stable, long-term tenants are often seen as lower risk. A great way to protect your properties and demonstrate this to your insurance carrier is a tenant education policy.
- Provide tenants with an overview of basic safety features of your property when they move in, and then initial this document as part of their lease. Showing your insurance company that you not only provide these benefits, but also educate your tenants about safety, can go a long way.
4- Security Measures: Security features, including surveillance systems and access controls, are significant factors for insurance approval. Apartment buildings with robust security measures are less susceptible to theft, vandalism, and other criminal activities, reducing the likelihood of insurance claims.
- In today’s digital world, there are many easy-to-use security systems available to property owners. Take the time to select one and have it professionally installed all around your building before something happens to make you wish it was already in place.
5- Compliance with Building Codes and Regulations: Adherence to the local building codes and fire regulations is a fundamental requirement for insurance approval. Insurance companies appreciate property owners who stay updated on and comply with building codes, especially in regards to fire protection when you have a wood frame building.
- Make sure you research the codes and regulations for your property prior to doing any repairs or updates, and ensure your contractor is well-versed in the law as well. It is worth the preparation to do work correctly the first time – and you can avoid extra visits from the inspector.
6- Avoid Liability: Show your insurance company that you are as active as possible in the diminishing of fault. Ensure details such as snow removal and salting are well-documented, in case a tenant has a “slip and fall”. How about providing a splash pad instead of a full pool to avoid that culpability? Those tree roots lifting the sidewalk are a trip hazard for your tenants. Think ahead to avoid risks.
- Consider bringing Grandma on a stroll around your property. Any time that she needs to lean on your arm to navigate, you’ll know that you’ve just uncovered a potential liability for your tenants.
7- Mandate Renter’s Insurance: Do this in a structure where you pass the cost of the insurance on to the tenant with a flat fee each month, but you source and place the insurance to ensure it is done and stays in place.
- Check with your insurance provider to see if they also offer renter’s insurance. You may be able to earn more discounted rates if you use the same carrier for building insurance and individual renter’s insurance.
Conclusion
Insuring an apartment building involves a thorough evaluation of various factors by insurance companies. Multifamily property owners can enhance their chances of insurance approval by prioritizing property maintenance, implementing risk mitigation measures, screening tenants, improving building security, complying with building codes, maintaining a positive insurance history, and showcasing financial stability. By addressing these key factors, property owners can not only secure comprehensive insurance coverage by can also potentially benefit from more favorable, premium rates.
Looking to add an apartment building to your investment portfolio? Contact us today to find the property that’s right for you.
