10 Essential Coverages for Multifamily Rental Properties You Can’t Overlook

Nate Jones, CPCU, ARM, CLCS, AU
4 days ago
2 min read

Owning a multifamily rental property comes with unique risks compared to single-family rentals. Proper multifamily rental property insurance protects owners from property damage, liability claims, and lost rental income.

Below are 10 essential coverages that every multifamily property owner should consider to ensure comprehensive protection.

1. Property Damage Coverage

Property coverage protects the building itself, including:

Structure and roof
Fixtures, HVAC, and plumbing
Common areas

This is the foundation of any multifamily rental property insurance policy. For more on property coverage basics, see the Insurance Information Institute.

2. Personal Property Coverage

This coverage protects any owner-provided furnishings or appliances in units or common areas, such as:

Laundry machines
Office equipment
Furnishings in furnished units

Tenant belongings are not covered under this policy; renters should carry separate insurance.

3. Liability Coverage

Liability coverage protects against injury claims on the property, including:

Slip-and-fall accidents in hallways or stairwells
Dog bites or other tenant injuries
Fire or water damage-related claims

For guidance on liability management in apartment properties, see the National Apartment Association.

4. Loss of Rental Income Coverage

Also called business income coverage, this protects owners if tenants must vacate due to a covered loss. It can reimburse:

Rent payments
Mortgage or property expenses
Operating costs

5. Ordinance & Law Coverage

Older buildings may need to meet updated building codes after a loss. Ordinance and law coverage pays for additional costs to rebuild in compliance with current codes. The International Code Council outlines these requirements.

6. Equipment Breakdown Coverage

Protects critical systems such as:

Boilers
HVAC systems
Electrical panels

Standard multifamily rental property insurance often excludes mechanical failures unless caused by a covered peril.

7. Sewer and Drain Backup Coverage

This endorsement protects against water damage caused by sewer or drain backups, which is often excluded in base policies. Claims can affect multiple units simultaneously, making this coverage essential.

8. Umbrella Liability Coverage

An umbrella policy provides additional liability protection beyond your base multifamily rental property insurance limits. It’s especially important for larger apartment buildings with higher risk exposure.

9. Flood Insurance

Most standard apartment insurance policies exclude flood damage. If your property is in a flood-prone area, consider coverage through the National Flood Insurance Program.

10. Vacancy or Renovation Coverage

If units are vacant or undergoing renovations, some policies restrict coverage. Adding this endorsement ensures protection during periods of non-occupancy.