Apartment owners throughout Northeast Ohio may be in for a surprise when they open their insurance renewals this year! Several factors have come together that are affecting this class of business, and policyholders may see 15-20 percent increases this year.
Some issues that are affecting Northeast Ohio directly are caused by the older stock of commercial habitational units. With the rapidly rising costs of building materials, underwriters are increasing building values at a much higher rate than the 2-4 percent we have been seeing.
I have heard such phrases from commercial underwriters that there is a corporate initiative to ensure we have all risks insured to the proper value. Increasing the total insurable value of an apartment building increases the final premium an insured pays.
Another issue with the older stock of apartments in Greater Cleveland is availability, as fewer companies want to insure such older facilities. Some older apartments still have knob and tube (K&T) wiring. K&T is an older much less safe type of wiring than NM (commonly called Romex). Until recently at Richey-Barrett we had a partner company that would accept apartments with K&T, however, they no longer will. This creates a problem of access to insurance for many landlords. Another issue caused by the aging stock of apartments for underwriters is the exposure to building ordinances or law coverage. This coverage addresses rebuilding apartments to the current code after a loss. (For more information on this coverage check out a previous blog on our website)
Issues that affect Northeast Ohio landlords indirectly but are also causing rate increases are the growing losses caused by natural disasters such as hurricanes, wildfires, and extreme temperatures such as the exposure to polar vortices.
What can an owner do to mitigate these increases? Identify key points with your agent as to why your building is an above-average risk deserving the best rates available. Items can range from building maintenance to life safety, but sharing what you are doing to make your apartments a great place to live is key.
The Trusted choice agents at Richey-Barrett will review your exposures with you to ensure you are getting the most comprehensive insurance coverage available. So, before you renew your insurance policy or purchase another apartment contact us and we will be happy to help you.