Multi-Unit Property Insurance – Whether you’re the owner of a multi-unit building with private units or you’re looking to rent out individual units to prospective tenants, you’ll need to decide which type of insurance will best protect you.
At Muller Insurance, we offer several types of insurance to protect your building and some of the liabilities associated with renting non-family units.
We’ve broken down some of the most important things you need to know about multi-unit property Insurance policies and what coverage they offer.
What is a Multi-Unit Property Insurance?
Multi-Unit Property Insurance is basically any building that has more than one place to live. It could be a duplex, a condominium, a small apartment, or a townhome.
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Each unit has to have its own bathroom, kitchen, private entrance, and a separate utility meter. If the building you live in meets these criteria or can be remodeled to fit them, it’s considered a multiple-unit dwelling.
What types of insurance cover multi-unit dwellings?
Muller Insurance has several policies for multifamily dwellings, some of which include the following:
- Tenant-Occupied Dwelling or Commercial Lines Approach
Tenant-occupied dwellings are buildings that have tenants but are not your primary home. This type of insurance covers:
- Loss of rent
- General liability
- Property insurance
While this is the most common type of tenant-occupied dwelling insurance, you can add other types of coverage. For example, you can add protection for your tenant’s property. This, combined with your tenant’s renter’s insurance, will pay for your tenant’s replacement of damaged property.
Commercial insurance companies will write single-family and most multi-family properties. However, there are limitations here as well. Most will write duplexes and triplexes but may pass on fourplexes.
Some will write up to sixplexes and small apartment buildings. Knowing the limitations of each insurance company ahead of time is better than after you purchase another property.
Most commercial policies will list the individual properties on one policy with a list of properties. As you purchase or sell properties, they are added or removed from the list. Administering one policy is much easier than administering 10.
Pricing may vary from policy to policy. However, commercial policies are typically bundled with higher liability limits than personal lines policies. In many instances, commercial policies offer better liability protection in case the owner is sued for negligence.
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- Owner-Occupied Dwelling or Personal Lines Approach
This type of insurance provides the same level of coverage as homeowners insurance, but with the added benefits that come with tenant-occupancy dwelling insurance.
Most home and auto insurance companies will also offer rental property policies to their clients. If they do, they do so as a service for their individual clients.
There are typically three restrictions on what they can do.
The first restriction is what kind of rental property you own. Most insurance companies will write rental insurance policies on single-family homes and duplexes.
The more units you have, the more likely it is that they will write triplex, quadruplex, or large multi-family policies on your personal lines policy.
In most cases, the investment property must be in your name or the name of the couple you own the property with. Many insurance companies will not write you a policy if you, your spouse, or a group of investors have formed a legal entity to own the investment property.
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The second caveat typically relates to how many properties a company writes. Some companies will only write two or four rental properties. Others will write eight, sixteen, or twenty-five. Every carrier is different, so it’s important to understand what they’ll be writing and how that affects you.
Most companies will also have different rating structures for primary homes compared to rental properties. Some will charge lower rates on investment property, while others will charge higher rates on rental property, so compare rates with several companies.
Each property will also have its own unique policy with its start and end dates. This can make it difficult for an investor with 6+ properties to keep track of everything.
Think about additional coverage policies.
In addition to our standard policies, there are a few extra protections you can add if you live in an area with certain risks. Here’s what we’re offering at Muller Insurance:
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Earthquake insurance: Earthquake is not a joint natural event, which is why it’s rarely included in standard insurance policies. If your home is located in an area prone to earthquakes, you should add this to your current policy.
Workers’ compensation: In many states, workers’ compensation is a required policy, but it’s often not included in your initial policy. This provides extra help for those who are injured on the job.
Flood insurance: If your home is close to a body of water or has a history of flooding during the wet season, you’ll need to have flood insurance. Most homes aren’t built near bodies of water, so this isn’t included in a standard insurance package.
Umbrella insurance: Even your most careful landlords can be sued for mismanagement of your property if a claim is brought before a court. Umbrella insurance pays for the legal fees that follow.
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If you have any further questions about the multi-unit property insurance policy, kindly drop your comment under this post or via our contact us page.