Regardless of whether you own a smaller apartment complex with a dozen units or less or you own a much larger property, the property is understandably a large investment that you want to insure. If you have a mortgage against the property, your lender typically will require you to maintain a multifamily insurance policy with specific minimum coverage types and limits. Insuring apartments in Arizona may be essential, but the type of coverage that you purchase plays a major role in how effective and protective the policy is to you.
One of the more important types of coverage to consider when insuring apartments in Arizona is liability coverage. This type of insurance pays other parties and does not provide you with any compensation. Other parties may sue you for damages, such as if they are injured on your property because of negligent property maintenance. This is only one of many types of liability situations that you may face. Coverage may pay for legal costs associated with a lawsuit, a settlement outside of the courtroom or a court-ordered judgment. Before buying this type of coverage, it is important to understand all the liability risks that you may face as a commercial property owner and the potential costs associated with those risks.
Building Repair or Replacement Coverage
In addition to liability risks, there are also financial risks associated with property damage. Building or property coverage may pay for repairs or even for a full building replacement when the property is damaged by fire, windstorm, and many other events. Keep in mind that flood insurance typically needs to be purchased as a separate coverage. This type of coverage is not usually necessary when insuring apartments in Arizona, but you should research flood plans to determine what your property’s risk is. When insuring apartments in Arizona, remember that you do not need to insure the value of the land. Insurance coverage should be in an amount required to completely replace the building in a worst-case scenario. Land is never destroyed, so it does not require coverage.
In addition to focusing on the types of coverage for apartments and their limits, you should choose an affordable deductible. A common deductible amount when insuring apartments in Arizona is one percent of the property’s value. However, this can be a small fortune when you own a larger apartment complex. Always ensure that the deductible is affordable for you to pay at a moment’s notice. Keeping an equivalent amount of money in a savings or money market account is a smart idea.
Did you enjoy this blog? Check out our other blogs related to the insurance industry.