Multifamily Insurance Trips and Traps

Surely every property owner’s nightmares must include finding out in the aftermath of a hurricane, fire or a lawsuit that insurance does not cover the costs. What a disaster! Apartment owners must be very careful to risk-manage properly and make sure their assets have the correct insurance policies.

Experts’ advice for ensuring proper insurance protection for apartment properties typically fall into three categories: Making sure that the right type of insurance is purchased, ensuring that enough coverage is purchased and selecting the right insurance broker.

Simply opting for the policy with the lowest premium “just because they are trying to save money” is one of the most common pitfalls of apartment owners, says Carlton Einsel, executive vice president of The Donaldson Group, a third-party apartment manager. “But people do that,” he adds.

According to attorney Barry Fleishman, partner at Kilpatrick Townsend & Stockton LLP, the most typical missteps apartment companies can make include not adequately understanding the coverage, not reviewing the actual policy terms with their brokers and legal counsel, and failing to compare losses in the past to their current coverage. Insurance is a very difficult and complex field, says Fleishman, and the risk manager or CFO should work closely with the broker and/or an insurance attorney to make sure there are no unintended gaps in the protection.

What type of insurance to purchase

First, apartment owners need to ensure the correct type of insurance is acquired. Experts advise that owners purchase all-risk—rather than named-peril—insurance, whether the insurance is third-party property insurance or general liability insurance. This is because named-peril insurance covers only risks that are specifically named, whereas all-risk insurance covers all risks except those explicitly excluded. Property owners should also be careful to have policies that reimburse at replacement cost—and that cover business interruption.

“Buy broad, all-risk, policies, rather than named-peril policies,” says Steve Cataldo, director of risk management at Greystar, which oversees insurance for a management portfolio of more than 48,000 apartment units.

Property insurance coverage generally applies to “all risks,” such as  fire, explosions, earthquakes, tornados and hurricanes, with the exception of specific exclusions. Fleishman, a legal specialist in policyholder insurance coverage, says it’s important that the apartment company review the risk history of the property and the areas in which losses were suffered in the past, and then ensure that none of these exposures are excluded from coverage.

The terms of the insurance, naturally, will be influenced by the location of the property. If the apartment asset is close to a disaster prone area, such as a flood or an earthquake zone, the insurance policy will likely contain sublimits that may be much lower than the coverage for the basic perils.

Certain perils such as windstorms and earthquakes may also carry higher deductibles, depending on the location of the asset, adds Derek Ramsey, Greystar CFO. The apartment owner needs to determine its ability to fund the deductible if a loss occurs. If available cash will be insufficient to meet that deductible, then the owner may want to consider paying a higher premium in order to obtain a lower deductible, he points out.

If coverage for particular risks-—such as flood, pollution or earthquakes in certain regions—is not found in traditional types of policies, the property owner may be able to look to alternative instruments for managing risks. These alternative instruments, which can be very sophisticated, include specialty risk policies (such as pollution liability policies), catastrophe bonds, self-insurance supported by re-insurance, or industry risk retention pools, says Fleishman.

As regards both liability and property insurance, Fleishman advises that apartment owners ensure that all layers of insurance—primary, umbrella and excess—be consistent with each other. For example, property owners should make sure that certain excluded losses in primary layers are not also excluded in umbrella or excess layers. In such cases, there would be a gap in coverage.

“Sit with your broker (or attorney) and go through the policy page by page(it takes one day or so), and understand what is in the policy: what is covered and what is excluded,” he says. “The broker should make sure the policy is consistent in each layer of insurance or tell the client where it is not.”


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Restaurant Insurance Basics

One area in the restaurant business you do not want to skimp is insurance. Insurance can protect you and your business for a myriad of problems, from broken equipment to liability lawsuits. Depending on where you live, you will need certain types of insurance for your restaurant. You will also need to carry certain types of insurance to satisfy your bank loans and mortgage.
The most common types of restaurant insurance available include:
• Property Insurance- – Protects your property in case of fire or other events. It may not cover natural disasters, such as floods or earthquakes (see below for a policy that does.) If you have any kind of mortgage on your business and/or equipment, then you should carry a property insurance policy.
• General Liability – This is the umbrella policy that protects you in the event someone slips and falls in your restaurant, gets sick after eating there (whether it was your fault or not). This is a must have in today’s sometime sue-happy world.
• Liquor Liability – Most states require that any establishment holding a liquor license carry liquor liability as part of their insurance. It helps protect you if a customer has too much to drink and drives and hurts themselves or someone else.
• Automobile Liability – If you have a company vehicle, this is a good insurance to have. It may be covered in your general liability, but always check with your insurance agent first.
• Workers Compensation – Protects you if an employee is hurt at work. Most states require that all employers carry some type of workers comp.
•Unemployment Insurance– Is for your employees who no longer work for you until they find employment.
• Life Insurance – Depending on your mortgage and financing you may need to carry a hefty life insurance policy to satisfy your lender. It is also a good idea to have life insurance, in case something does happen to you and your family isn’t left with a restaurant they don’t know how to run and bills they can’t pay.
There is insurance for just about any object, action or person out there. Here are some other types of insurance you can purchase for your restaurant.

• Loss of Business Insurance – If you lose sales through a specific cause, this type of policy can recoup some of the income. Keep in mind the premiums and deductible may make you break even, depending on how much you lose.
• Food Contamination Insurance - If you lose power, because of fallen power lines or a storm, and the entire contents of your walk-in and freezer spoil, this policy would pay to replace the food.
• Specific Peril InsuranceThis covers many natural disasters that general liability insurance doesn’t. Events like earthquakes, floods or power outages due to either, may be covered under this insurance.

Use a trusted insurance agentwhen buying insurance when you are opening a new restaurant. They will know the local and state laws pertaining to how much insurance you need and can help you decide how much more you want to carry.

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Does Homeowners Insurance Cover Theft Outside the Home?

Many losses of personal property due to theft outside your home may be covered by off-premises coverage. This type of coverage is included standard in many policies, however off-premises policies may not be available in all areas, particularly areas with high crime rates.  But many insurers will add an off-premises rider to your coverage for a small extra charge if it’s not included in your policy.

Your off-premises coverage isn’t a panacea for all your losses to theft, however. Your policy won’t cover the loss of an automobile--although your auto policy might--or CDs, stereos or MP3 players stolen from a car. Your homeowner’s policy usually won’t cover the loss of a boat, an outboard motor or other items from a boat that isn’t parked at your home, either. The claims limit of some high-ticket items, such as jewelry, electronics or collectibles, may be much lower than the item’s actual value.

If your children are college students, your homeowner’s policy may even extend to losses from theft they suffer. Many policies’ off-premises coverage extends to the homeowner’s children who are students if they live in the dorm, so property stolen from a dorm room or when they’re studying -- such as a laptop stolen while they were at the library -- may be covered. When your child moves out of campus housing and into her own apartment or house, she’ll probably need to carry her own renter’s policy to cover thefts.

Source: http://homeguides.sfgate.com/homeowners-insurance-cover-theft-outside-home-53333.html

Main Line Insurance Office has been providing service to our customers since opening our doors in 1974. We are licensed in and serve businesses and individuals in PA, DE, NJ, MD, VA, and FL. Our staff will help you analyze your insurance coverage issues to develop insurance policies for your specific requirements.