Commercial Real Estate, Apartments & Property Managers

Insurance considerations by property type

Every building is underwritten on its own details. Here is what typically shapes the insurance conversation for each type of property.

Apartment buildings and multifamily properties (four or more units)

Apartment buildings with four or more units are often insured on commercial property and liability policies, depending on the insurance company. Insurers typically look at the number of units, year built, construction type, updates to the roof, plumbing and electrical systems, fire protection and occupancy. Common areas such as hallways, stairways, parking, laundry rooms and pools can also affect liability exposure.

Mixed-use buildings

A building with retail, restaurant or office space alongside residential units combines different exposures under one roof. The commercial tenants' operations, the insurance they carry and the lease terms all matter, and some occupancies, such as restaurants, may affect property eligibility and pricing.

Commercial real estate and income-producing properties

Office, retail and other income-producing buildings are usually reviewed alongside their leases. A lease may spell out who insures the building, who insures tenant improvements, what liability limits tenants must carry and who should be named as additional insured.

Property management companies

A company that manages buildings on behalf of owners has its own business exposures, including employees, office operations, vehicles and the professional services it provides to owners. Those exposures are generally separate from the insurance on the buildings it manages.

Owner insurance vs. management company insurance

• The property owner's insurance is built around the building: covered damage to the property and liability arising from the premises, subject to policy terms. A management agreement may require the owner to name the manager as an additional insured.
• The management company's insurance is built around its own business operations, and may include general liability, professional liability (errors and omissions), workers' compensation and commercial auto. An owner's policy generally isn't designed to cover the management company's own business.

Coverage to understand

These are the coverage areas we most often review with building owners and property managers. Not every coverage is included automatically, and not every coverage is available for every property. Explore business insurance

Commercial property coverage

Commercial property insurance may help pay for covered damage to the building and other eligible property, such as certain equipment or contents the owner provides. Setting limits starts with an appropriate valuation, often an estimated replacement cost, along with the property's construction, age, condition and the policy terms. A limit that is too low may leave the owner paying more of a covered loss.

Premises and general liability

General liability may help respond to covered claims alleging bodily injury or property damage to others, for example a visitor who is hurt on a stairway or in a parking area. Common exposures involve tenants, guests and vendors, common areas, walkways, lighting, pools and the general condition of the property. Coverage depends on the policy's terms and exclusions.

Loss of rental income

If a covered property loss makes units unusable, loss of rents or rental income coverage may help replace rent lost while the property is repaired, subject to the policy's provisions and limits. It generally applies only when the underlying property damage is covered.

Commercial umbrella or excess liability

A commercial umbrella or excess liability policy may add limits above underlying policies such as general liability, which can help with certain large covered claims. Insurance companies usually require specific underlying limits first. About commercial umbrella

Property management company insurance

A management company's own program may include general liability for its operations; professional liability (errors and omissions) for claims alleging mistakes in the services it provides; workers' compensation, which California requires for businesses with employees; and commercial auto, including hired and non-owned auto, when vehicles are used for work. Availability depends on the company's operations and underwriting. Workers' compensation · Commercial auto

Earthquake and other property exposures

Earthquake damage is typically excluded from standard commercial property policies. Earthquake coverage may be available separately, often with a percentage deductible and its own limits, and some lenders require it. Flood is also typically excluded and needs separate coverage.

Owners should also review how a policy treats water damage, such as a sudden pipe burst compared with a slow leak, along with fire, vacancy and any other exclusions or limitations, which vary by policy. About flood and earthquake coverage

Lease and lender requirements, explained

Loan documents, leases and management agreements often spell out the insurance an owner or manager must carry. We can help review those requirements against current coverage. The details depend on the specific contract, lender, property and policy, and the insurance company decides what it can offer.

• Loan documents. Lenders commonly set minimum property and liability limits, deductible maximums and a mortgagee clause naming the lender on the property policy.
• Leases and certificates. Leases may require the owner and tenants to carry specific coverage and to show it with certificates of insurance.
• Additional insured and contracts. Property managers, tenants or others may ask to be named as additional insured. Contracts may also include indemnity or waiver of subrogation wording worth reviewing.
• Valuation and limits. Lenders may require building limits based on replacement cost. A current valuation helps set appropriate limits.
• Liability and umbrella limits. Contracts may require minimum liability limits, sometimes with an umbrella or excess policy above them.
• Loss of rents. Some lenders require loss of rents coverage for a specified amount or period.
• Endorsements and conditions. Required wording, cancellation notice provisions or other endorsements need to be checked against what the insurance company can provide.

Preparing for a Commercial Property Insurance Review

Having these details ready helps our office understand the property and the information an insurance company may ask for. If you don't have everything, we can start with what you have.

For building owners

• Property address
• Number of units and any commercial space
• Year built and major updates
• Construction details, such as frame or masonry and number of stories
• Current declarations page
• Estimated replacement cost
• Occupancy and any vacancies
• Claims history
• Existing liability limits
• Lender and lease insurance requirements

For property management companies

• Description of operations and services
• Number of employees
• Number and type of properties managed
• Existing business coverage and declarations pages
• Vehicles used for work

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Frequently asked questions

What insurance does an apartment building owner need?

It depends on the building, the loan and the leases. Owners commonly review commercial property coverage for the building, general liability for the premises, loss of rental income, and umbrella or excess liability. Earthquake coverage is usually a separate decision. Lenders and contracts may require specific coverage and limits, and availability depends on underwriting.

What is the difference between commercial property insurance and general liability?

Commercial property insurance is for covered physical damage to the building and other eligible property the owner insures. General liability is for covered claims made by others, such as a visitor alleging an injury on the premises. Most owners review both, and each has its own terms, limits and exclusions.

Can insurance help replace lost rental income?

It may. Loss of rents or rental income coverage may help replace rent lost while the property is repaired after a covered loss, subject to the policy's provisions and limits. It generally doesn't apply to losses the property policy doesn't cover, or to rent lost for other reasons, such as a tenant not paying.

Does a property manager need separate insurance from the building owner?

Usually, yes. The owner's policy is designed around the building. A management company generally needs its own business coverage, which may include general liability, professional liability (E&O), workers' compensation if it has employees, and commercial auto when relevant. A management agreement may also require the owner to name the manager as an additional insured.

Is earthquake insurance included in commercial property insurance?

Typically not. Earthquake damage is generally excluded from standard commercial property policies and may be available separately, often with a percentage deductible. Availability and terms depend on the property and the insurance company.

What information is needed to request a quote?

For a building: the address, number of units, year built, construction details, current declarations page, estimated replacement cost, occupancy, claims history, current liability limits and any lender requirements. For a management company: its operations, number of employees and existing business coverage. Our office will let you know if an insurance company asks for more.