Multi-family complexes include rental apartments, condominiums, and cooperative apartments. For insurance purposes, they have many common characteristics and some important individual differences.

Rental apartments are multi-resident buildings owned by an individual, partnership, or corporation. Condominiums include unit owners, who hold title to their living space and an association of unit owners that controls the common areas. In a cooperative, commonly known as a "co-op," the residents hold a life tenancy to their apartments and they own stock in the corporation that owns the building.

In all three formats, insurance should be purchased to properly cover all buildings, equipment, and related business personal property owned by the building owning entity.

The insurance policy should provide coverage for replacement cost, agreed amount clause, flood and earthquake, ordinance or law, code upgrade, loss of rental income, extra expense coverage, and back up of sewers and drains. Additional coverages may include: debris removal, preservation of property, fire department charges, pollution cleanup, newly acquired or constructed property, outdoor equipment, etc.

If multiple buildings are involved, a blanket insurance policy is recommended. 

There are three levels of covered causes of loss which may be written: Basic Form, Broad Form, and Special Form.

The Basic Form covers losses caused by:

fire, lightning, wind, hail, explosion, damage by aircraft or vehicles, riot, civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. 

The Broad Form includes the perils of the Basic Form and also covers losses caused by:

falling objects, weight of snow, ice or sleet, water damage, and glass breakage.

The Special Form includes all risk of direct physical loss not otherwise excluded or limited. This Special Form provides the most comprehensive coverage and is the most desirable.

Since condominiums differ from rental apartments and cooperatives, they have unique insurance problems. A condominium owner will need to know if the condominium association requires "all in" coverage or "bare walls" coverage. The decision will be based on the condominium declarations and bylaws. The condominium declarations will determine who is responsible to insure certain elements of the property.

A most critical and valuable insurance coverage is "ordinance of law" endorsement. State building and zoning ordinances along with federal regulations have increased in recent years. These regulations create a potentially costly exposure apartment complexes, which are insured by Basic Form property insurance. If there have been important changes in building and zoning laws since apartment units have been built, then the cost to upgrade after an insured loss occurs would not normally be covered under most property insurance policies.

Three coverages are available:

1. Contingent Liability for Operation of Building Laws.

2. Demolition Insurance.

3. Increased Cost of Construction Insurance.

Some examples of upgrades may be: alarm systems, sprinkler systems, ADA ramps, railings, certain disabled persons issues, insulation, windows, asbestos removal, elevators, emergency generators, emergency lighting, etc.

Since many existing properties are "grandfathered" when the law changes, property owners need not comply until a new building permit is required for major repairs. This usually happens after a fire or other casualty loss occurs. Other issues to consider may be lease provisions, repair and maintenance provisions, coverage interpretations, crime exposures, and liability exposures. 

After a loss, multi-family apartments may encounter some of the following problems: inadequate or non-existent coverage, lack of (or limited) business income, rental loss and extra expense insurance, insufficient limits of property insurance, a schedule of separate amounts per building versus blanket coverage over all buildings and lack of an agreed amount clause to replace the coinsurance clause.

An experienced and competent public adjuster can help you navigate these complex and often times confusing insurance issues.