Top Coverage Gaps to Avoid With Apartment Property Insurance
- Nate Jones, CPCU, ARM, CLCS, AU
- Jan 21
- 2 min read
Many apartment building owners assume their property is fully protected, until a claim reveals critical exclusions. Apartment property insurance coverage gaps are a leading cause of unexpected out‑of‑pocket expenses after a loss. Understanding and addressing these gaps can help you avoid costly surprises.
Here are the top coverage gaps apartment building owners should avoid.
1. Inadequate Replacement Cost Coverage
One of the most common gaps is under insuring the building. Market value and replacement cost are not the same. If your policy limit is too low, insurers may apply a coinsurance penalty, reducing claim payouts.
Construction costs continue to rise due to labour and materials inflation.
2. Missing Ordinance & Law Coverage
Older apartment buildings often require upgrades to meet current building codes after a loss. Ordinance & law coverage pays for:
Demolition of damaged portions
Code‑required repairs or upgrades
Without this coverage, owners often pay these expenses themselves.
3. No Coverage for Loss of Rental Income
If a covered loss forces tenants to move out temporarily, lost rent can quickly strain cash flow. Some policies only include limited business interruption coverage, or exclude it entirely.
Loss of rental income coverage is essential for maintaining financial stability during repairs.
4. Flood and Earthquake Exposures
Standard apartment property insurance does not cover flood or earthquake damage. Properties in flood zones or seismic areas need separate policies.
5. Equipment Breakdown Exclusions
Boilers, HVAC systems, elevators, and electrical equipment are common sources of major losses. Equipment failure caused by mechanical or electrical malfunction is often excluded unless endorsed.
Without this coverage, repair and replacement costs fall on the owner.
6. Vacancy or Maintenance‑Related Exclusions
Policies may limit or deny claims if a building is partially vacant or poorly maintained. Failure to disclose occupancy changes can void coverage altogether.
Close Coverage Gaps With a Specialist
Identifying and correcting coverage gaps takes expertise in the multifamily insurance market. Working with a specialist helps avoid policy blind spots.
Wexford Insurance works with insurance companies that insure apartment buildings nationwide. We help owners identify coverage gaps and secure property insurance designed for apartment risks.
👉 Get your apartment building insurance quote today at Wexford Insurance
