Multifamily property owners: Five ways to make the most of your insurance policy
When you need to file an insurance claim on your multifamily property, the benefits you receive will only be as good as the policy you purchased. While maintaining low monthly premiums might seem like the smartest business decision to protect your bottom line, the reality is, it could wind up costing you big in the long run.
Does your policy have adequate coverage for unexpected issues, or will you be stuck paying out of pocket in penalties, repairs or mandated upgrades? Here are five policy endorsements to consider to secure the future of your property and your investment.
1. Coinsurance
Coinsurance is a clause requiring policyholders to carry a sufficient dollar amount of insurance that is 80, 90 or 100 percent of the construction value of the property. If the ratio of your insurance limit to your property value isn’t adequate, prepare to be penalized. On a commercial property, a $2k mistake on your premium could mean getting hit with a $10k-$100k penalty on a future claim.
To avoid a coinsurance penalty, you need to determine exactly what it would cost to reconstruct the building if it were torn down to the slab and confirm the property is insured to that value. Foundations, underground plumbing and site work are typically not covered, but the cost to frame the building; install siding, windows and doors; complete all mechanical, electrical, plumbing and roofing work and perform the interior finish-out are all subject to valuation.
Knowing this specific valuation a……
Does your policy have adequate coverage for unexpected issues, or will you be stuck paying out of pocket in penalties, repairs or mandated upgrades? Here are five policy endorsements to consider to secure the future of your property and your investment.
1. Coinsurance
Coinsurance is a clause requiring policyholders to carry a sufficient dollar amount of insurance that is 80, 90 or 100 percent of the construction value of the property. If the ratio of your insurance limit to your property value isn’t adequate, prepare to be penalized. On a commercial property, a $2k mistake on your premium could mean getting hit with a $10k-$100k penalty on a future claim.
To avoid a coinsurance penalty, you need to determine exactly what it would cost to reconstruct the building if it were torn down to the slab and confirm the property is insured to that value. Foundations, underground plumbing and site work are typically not covered, but the cost to frame the building; install siding, windows and doors; complete all mechanical, electrical, plumbing and roofing work and perform the interior finish-out are all subject to valuation.
Knowing this specific valuation a……