High-Rise Insurance: Seven Essential Strategies for Protecting Your Property

Living in a high-rise building brings unique benefits like exceptional amenities, robust security, and concierge services, adding a luxurious touch to everyday life. However, insuring such properties comes with its own set of challenges. High-rises typically consist of multiple residences, each with individual policies, plus communal areas that demand coverage as well.

If you own, reside in, or oversee a high-rise residence, ensuring comprehensive insurance coverage is crucial for peace of mind. Here are some essential strategies to verify that your high-rise property is adequately protected.

Mind the gaps

In a high-rise condominium setting, two parties share the responsibility for insurance: the association and the unit owner. The association is typically accountable for property and liability insurance for communal areas such as lobbies, gyms, and pools, as well as the building's structure from the outer perimeter of individual units. Unit owners are responsible for securing insurance from the interior walls inward, covering any enhancements beyond the standard unit as outlined in the governing documents, as well as personal belongings. Although specifics differ by state or community, unit owners generally need additional coverage for any upgrades and personal items.

Find an expert

For board members seeking to secure insurance for their community, relying on a general insurance broker can lead to significant and costly errors. High-rise buildings have unique requirements, laws, and regulations that vary by region and state. Therefore, it's crucial to work with an insurance agent well-versed in the condominium industry in your area. An experienced insurance brokerage with a network of carriers specializing in high-rise properties is best equipped to find competitive and adequate coverage tailored to your needs.

Consider value, not just savings

While it's tempting to choose policies based solely on cost, ensuring adequate coverage is far more critical. An overly inexpensive policy may come with unwelcome risks and coverage gaps, leading to potentially large out-of-pocket expenses. Prioritizing insurance value, rather than just the premium, ensures you gain comprehensive protection. Peace of mind from well-suited insurance is invaluable, even if it means not opting for the lowest dollar amount.

Look at all types of coverage

Unit owners should consider HO-6 policies, which cover the “walls-in” contents, including unit upgrades. This policy bundles property and liability coverage and includes assessment coverage for out-of-pocket expenses not covered by the association's policy. Board members should invest in a Directors & Officers Liability policy to shield themselves and the building staff from legal claims. Combining this with Employment Practices Liability coverage protects against wrongful termination, harassment, and discrimination claims. Additionally, workers’ compensation and fidelity insurance, along with crime coverage, provide essential protection against theft and accidents. For older buildings, Building Ordinance & Law Coverage is vital to cover mandatory upgrades required by updated building codes.

Do not put it on autopilot

Annual expert reviews of insurance policies are crucial to ensure they remain current and effective. Just as you would consult a professional for tax or legal matters, a qualified expert should conduct insurance policy audits, aligning with any state laws that might mandate periodic appraisals.

Minimize risk

The cost of insurance correlates with the insured property's value and associated risks. While the property value is based on reconstruction costs, minimizing risk is the actionable component when aiming to reduce insurance costs. Collaborating with a knowledgeable property management company can help mitigate risks effectively.

Hire a good property management company

A proficient property management company can significantly impact your insurance strategy. Companies with national reach offer valuable risk management insights and leverage buying power to secure lower rates. They can also connect you with reputable insurance brokerage firms familiar with regional regulations, essential for procuring optimal insurance solutions.

While nobody can predict every mishap or loss, especially given the complexities of high-rise living, the right insurance coverage helps ensure preparedness for unexpected events. Properly insured homeowners and associations can rest easy, knowing that they are well-equipped to handle whatever comes their way.