Owning and operating a commercial property is no small feat, particularly when it comes to insuring it in the event of potential property damage. This is especially true for rental property owners and/or landlords who often have to mitigate damage while also ensuring their tenants are safe and properly taken care of. Well before a storm hits a rental property and causes damage to the exterior and/or interior of the building, property owners should already be well versed in what they can claim under their insurance policy.
Rental Property Storm Damage
When a severe storm such as a hurricane, tornado, or hailstorm causes damage to an apartment or rental property, there are many considerations to keep in mind before an insurance claim can be filed. For example, both the landlord and their tenants may have separate insurance policies in place that cover different events.
Renter’s insurance generally covers damage to the renter’s own property on or within the rented space. The insurance the landlord or property owner maintains, however, can cover a broad list of items under a variety of insurance policies, particularly when it comes to property damage from a storm or natural disaster. Rental property owners must know what kind of damage their policies cover well ahead of a potential storm.
Having the right insurance coverage in place is essential to running a rental property. Just like any other commercial property, when a rental property is damaged, it can leave the business at a standstill until the proper repairs can be made. Because of this, landlords and rental property owners will likely need to obtain multiple policies to adequately cover potential storm damage, including:
Landlord insurance covers property damage. These policies cover damage to the structure of a building or buildings due to covered perils, which can include fire, snow, and vandalism, among others. Additionally, this coverage also insures appliances and other items within the property that belong to the property owner.
Similar to business interruption coverage, landlord insurance also covers the loss of rental income in the event the property is uninhabitable due to damage. In certain instances, this is included within a standard landlord insurance policy; however, it can also be purchased separately as an endorsement or rider.
When a severe storm impacts a commercial property, the possibility of flooding can be a great concern. However, despite being one of the most common and expensive perils to a commercial property, coverage for flood-related damage after a storm is often not included in a landlord policy or a commercial property policy and must be purchased separately. This is especially true in Texas and other coastal states with high flooding activity throughout the year.
Flood insurance coverage can be purchased through the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program or through a private flood insurer. Typically, flood insurance will cover damage to commercial property, including:
- Electrical and plumbing systems
- Furnaces and water heaters
- Permanently installed carpeting
- Permanently installed cabinets, paneling, and bookcases
- Foundation walls, staircases, and anchorage systems
- Fuel tanks, well tanks, and pumps
- Portable and window air conditioners
- Carpets not included in building coverage, such as carpeting installed over wood floors
Just like with flood insurance, coverage for wind and hail damage to a rental property may have to be obtained separately from landlord or commercial property coverage. This is especially important for rental properties located in areas that are prone to hurricanes, hail, and windstorms. These policies typically cover physical damage to property, as well as personal belongings within the property. In addition, some insurers will impose separate hurricane, named storm, and/or windstorm deductibles on commercial policies.
Just as with flood and windstorm insurance, landlord insurance policies also exclude coverage for earthquake damage. According to the U.S. Geological Survey, 42 states stand a reasonable risk of tremors, with 16 of them considered high-risk. While Texas typically does not see earthquake activity, if a rental property owner has properties in other states that are prone to earthquake activity, they should purchase an earthquake insurance policy to cover potential damage.
Commercial Property Insurance
While some landlords may not think they need coverage under a commercial property policy, it’s very important to have. This is especially true for rental properties like apartment complexes that are often owned by larger corporations. This specific type of insurance covers damage to the premises of the rental property as well as items located within it, including equipment, furniture, supplies, and fixtures, among other items. This coverage can also cover the costs associated with the repair or replacement of stolen, damaged, or destroyed property.
When running a rental property, property owners must review their lease obligations in terms of insurance. While tenants are responsible for insuring their property within the space, in certain instances, they can also be responsible for insuring the building or for continuing to pay rent even if the space is inoperable or unusable. Reviewing these documents with legal counsel can help confirm whether existing insurance coverage is adequate.
Commercial Property Coverage Attorneys
While there are differences that come with owning and running a rental property as opposed to a standalone commercial property, both generally require much of the same insurance coverage, particularly when it comes to storms and other natural disasters. Despite having all the necessary coverage in place, insurance companies continue to utilize bad faith practices after policyholders file valid claims. If you are a commercial property owner of a rental space and have filed a valid commercial damage claim only to have it be wrongfully delayed, grossly underpaid, or denied, the insurance coverage attorneys at Raizner Law can help. Contact our office today for more information on how we can assist you.