Coburn & Feeley
Professional property management since 1978

346 Shelburne Rd.
Hickok & Boardman Place, Ground Floor
PO Box 4057
Burlington, VT 05406

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Tips for Choosing Apartment Building Insurance

Coburn and Feeley building insurance

At Coburn & Feeley we work closely with people who are investing in rental property. We know and understand the importance of apartment building insurance. When choosing apartment building insurance  there are numerous things to consider. For many of you, not only is your apartment building a large investment, it can also be a potential liability  should someone get hurt. We have partnered with our friend Joe Burkhard, president of Winooski Insurance,  to provide you with some tips for choosing apartment building insurance. Here are some ways to protect your investment and yourself from liabilities when choosing apartment building insurance.

Select the proper amount of insurance.

Most people think of their property in two ways:
#1. What is it worth?
#2. How much are the taxes?

However, the question you should be asking is this:
How much will it cost to REPLACE my structure if I suffer a large loss? Large losses do happen more than you think. We suggest you become familiar with the replacement cost and insure your building for that amount.

What if you don’t want to replace a damaged property?
Some carriers do offer the option of insuring your building at Actual Cash Value (ACV). This is defined as Replacement Cost-Depreciation. This will allow you to insure your building for less, but bear in mind if you suffer a large loss, the settlement will be less. This comes in handy for people who do not want to go through the process of rebuilding. The biggest challenge here is determining what the ACV limit should be.

When choosing apartment building insurance, be sure to get plenty of liability insurance.
How much is enough? How much can you afford or how much liability do you have? Most people underestimate their exposure. A loose railing, a furnace malfunction, or a faulty electric problem could all cause serious bodily injury to a tenant, for which you could be held liable. Start with at least $1,000,000 and go from there. You can always purchase an umbrella policy  for additional limits of liability to extend over the current policy.

Consider purchasing building ordinance or law coverage.
Did you know that if you suffer a loss, your insurance carrier is only obligated to restore you back to where you were before the loss? Your local town zoning office may have different ideas. They can enforce you to bring your building up to current zoning codes and this extra expense will not be part of the insurance settlement. It will be at your expense. The good news is you can purchase insurance coverage to cover this potential exposure. How much should you buy? It depends on many variables. You should start with the following: How old is your building and what are the current building/zoning codes today vs. what you have invested in your building. We strongly urge you to investigate this exposure.

Do you require your tenants to purchase renters insurance?
You should. Why? Perhaps the biggest reason is if they cause a substantial loss to your building, your insurance carrier will recover the loss by subrogating against your tenant’s policy. Why is this important? Imagine suffering a large fire loss caused by a tenant. Chances are after your insurance carrier pays you for the claim, they will either increase your rates tremendously or drop you. And this happened for a loss that was not your fault. Most property owners are okay with being dropped or having a rate increases if they, themselves, were negligent, but most property owners are not happy when this happens due to a tenant’s negligence. The other added benefit is the tenant will have coverage for a loss and not pursue damages against you, claiming some sort of negligence.

Earthquake and flood insurance.
If you are exposed to these perils, it never hurts to get an estimate for these coverages or policies. You can then gauge the cost vs. the risk.

These are the most common topics we evaluate for consumers when choosing apartment building insurance.

Feel free to call Coburn & Feeley at 802-864-5200 or send an email if you have any questions about property management or property rentals. You can contact Stephanie Allen, Executive VP and Chief Operating Officer, Coburn & Feeley or Rich Feeley, President, Coburn & Feeley.

If you have any insurance questions or concerns, contact Joe Burkhard, CIC, President, Winooski Insurance, or call 802-655-9000.

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