Insurance for apartment building

Hey all,

I bought a 7 unit property recently.

I had 5 units rented when I bought it, but one tenant left pretty quick (it was expected)

Anyway, I’ve decided to renovate the 3 units while empty to bring up to higher standards.

Likewise, I decided to put on a new roof, replace the main electric service, and do some major plumbing/heating repairs. (not me personally… I’m hiring this type of stuff out to pros)

Well… the insurance “inspector” comes by and says that I am violating their terms because I am doing renovations?

This has nothing to do with WHO does the work or anything. They just forbid any renovating!

I apparently missed this in the policy and it makes no sense to me.

When complete, the apartment will be LESS susceptible to leaks, electric fires, etc.

Anyway… has anyone ever encountered this?

Anyone in Massachusetts have an insurance company they work with and are pleased?

Thanks for any input. I got my 30 day notice today. :frowning:

Your policy probably requires the property to be occupied (probably requres more than 50% occupied status). While renovations are going on it is below that occupancy rate. Most of the time it is not problem unless the insurance company sends out an inspector (which looks like happened to you). They usually ask for a copy of the signed lease and they leave you alone. So if you get it rehabbed and leased within a month you should be ok. If not you need to get a builder’s risk policy which is more expensive but covers things like work site theft etc.

50% sounds reasonable… but that’s not it.

I have 4 of 7 occupied.

The 5th unit is renovated and just waiting for new tenants.

The 6th and 7th are empty and being renovated.

Oh well… just another curveball on my first rental property. Like the others, I’m sure I’ll figure it out and learn.


Sounds like there’s a couple of things going on. First as for insurance companies, I typically go to agents and they shop it against a few companies. There’s a few agents I’ve used that always seem to come up with a good price. There’s also the Massachusetts Fair plan, but their rates tend to be the highest unless you happen to be on the water and can’t get any insurance.

Also you have a commercial property which probably has a different set of rules than regular properties. I know that getting a commercial loan usually requires a high occupancy percentage, something like 80-85% occupancy.

As for fixing the place up, that would probably increase the amount of coverage you would need because the building might be worth more now? Although they do make you insure it for replacement value.

Also it’s pretty standard for companies to send out an inspector within a month or two of you getting your policy so don’t do any work til after they show up and leave. They only do that once and never really bother you again unless you switch policies.

The last paragraph is probably the most important… and unfortunately, about 2 weeks too late.


But… as I mentioned above… there’s another thing I just learned.


Not sure what my options are at this moment… my agent is shopping around.

Worst case, I’ll go with a higher rate policy until the renovations are done… hopefully by May 1st or so.

Thanks again.

Hey all, i’m not sure if you’re still reading this or interested with my late comments but I actually work for one of the largest commercial insurers in the country. Your situation is something I see and deal with every day. Basically, the company offered you a proposal based on the fact your units would be occupied and functional throughout the months. When the inspector (they do come with larger premium accounts) visits the property he sees a renovation work as an increase in hazards. There are a couple ways you could have a loss while renovating… one, your contractors being hired may not have insurance or adequate insurance to cover a loss they were responsible for. If this is the case, your policy would pick up the rest. As you can see, this was not assumed in the initial premium you were offered and could cost the profit of your account. If you had a good insurance agent, they proabably would have a relationship and be able to help you manage your risk to a point where the company would stay on the account for a couple months.

my rec, get an insurance agent you trust on your team. Happy renting.

So… does your company do business in Massachusetts?


we write in all states, yes. However, we’re not very competitive on apartment risks. I would recommend getting in with a larger agency and letting them shop your building. You can probably find a rate around $.12/$100 in building coverage.

twelve cents per $100?

So for $500,000 coverage… about $600 per year?

exactly…that’s in my market, however. Massachusetts is probably a different ball game. Nationwide has been tearing up the habitational market…maybe start there?

Good luck!


Let me know if you find someone that cheap in Massachusetts. I think on my 3 families I’m paying $1500-$1600 a year for about $500k worth of coverage and would love to find something cheaper. Still haven’t found an insurance company that was cheaper and I think the Mass Fair plan was quoting me over $2k. That of course is for just the fire and dwelling policy as it’s non owner occupied.

Naturally… Nationwide doesn’t do stuff in MASS.


Henry… Would you mind telling me who you use for the $1500 range?

I have a great insurance company in MA, not sure if you are allowed to post name and phone on forums.

Yes you can post recommendations of “who you use”…you cannot advertise for your or your comapny’s business…



Lisa Lemon
Berkshire Insurance Group

Thanks, Mike.

If my agent can’t come up with a good solution… I’ll give her a call.