Apartment Owners: Steps when filing an insurance claim
Updated: Mar 6, 2020
I am a big advocate of preventative maintenance. A building can save thousands per unit in damage and repairs. Turning a building around after neglect can be costly, and the loss shows up in discounts when the building is sold. The worst case scenario is neglect leads to a problem beyond the investor's ability to put money back into the building.
There are still instances outside of preventative measures in which a loss can happen. Keep in mind the steps to take if your building is faced with such a loss. This is the point you really want to be organized when the emotion and stress of impact on the residents in your property and damage to your investment hits.
Step 1: Document the source of the problem.
Document when a problem happened, what is affected. Insurance will not replace a failed item, but covers the damage that happens as a result of that failure. Outside of the insurance process, you will be taking steps to mitigate further damage and deal with affected residents.
***Save the item that failed, even after a representative of the insurance company says you don't need it anymore.***
Step 2: Report the damage to your insurance company
Refer to your insurance policy number (this will be easily referenced on the main page of your property binder if you have worked with Tci Building Services). The insurance company will need to send a representative out to see the problem. Explain the steps that you are taking and confirm what the insurance company is OK with you proceeding to do before their inspection.
Step 3: Report the loss to your lender
A large loss that results in significant rebuild of the property will require your lender to sign off on checks. Notifying the lender early will speed the process of paying vendors or receiving reimbursements.
Step 3.5: Switch utilities to the building's account
Should your loss affect a unit that has to be rebuilt, it will be cleanest to put utilities in the name of the building for the duration of the project if typically in a tenant's name. The property manager can do this. (Account numbers and phone numbers of the provider will be in the contacts section of your Tci Building Services property binder)
Step 4: Document and communicate by e-mail
Your insurance company will likely give you an email to correspond with. Typically you will have to title your email with your policy number. You will provide pictures, leases, and invoices to the insurer this way.
Step 4.5 (Big Claims) Consider hiring a Public Adjuster / Get Bond Insurance
Insurance companies have an interest in keeping claim numbers down and will be working in their own interest. Hiring a Public Adjuster can ensure that the claim fully addresses what is due to you by your policy and help prevent damages from being under-estimated or compensated. You will be responsible for paying the adjuster.
Performance Bond Insurance
You will likely have an apartment or several out of service while a contractor is doing the needed remediation work. Getting insurance to ensure the contractor stays on schedule can prevent bigger problems down the road. Should the contractor fall behind, the bond insurance can be called on to get someone that does complete the contract as agreed upon.
Step 5: Wrapping up the project
Once rebuild is complete, there will likely be city inspections, inspections by your insurer, and inspections by the lender. Ensure that you have accounted for the items your policy covers. This includes utilities, loss of rent, and work by the contractors. Make sure contractors have paid subcontractors on a big project. Delays in payments can happen if the lender hasn't been informed of the project.
Step 6: Document the loss happened for your records
You will likely have to report that this loss happened when you are selling your building. A summary of the problem and what was done will help when you are ready to sell.
Update: I recently had to go through this process on a property that I own.
I was so happy to be able to pull out my own Owner's Manual to reference numbers and contact information while dealing with the claim.