Do I Need Separate Insurance Policies for Each Rental Property or Apartment Building?
Many property owners who have multiple buildings in their portfolios ask whether we recommend separate insurance policies. We present options for a master policy and provide them with the information they need to choose the right protection for their needs.
Understanding Insurance for Multiple Rental Properties
A master policy, which is a single insurance policy that protects multiple buildings, can provide significant savings over buying separate policies for each building.
Combining multiple buildings on a single policy (a master policy of scheduled locations) is one of the ways in which we help building owners in New York City save time and money. Scheduling multiple buildings on a single policy works much like adding a second or third car to your automobile coverage. Some companies offer a discount when you bundle properties; others don’t. (Hint: We know which ones offer “package deals.”)
Don’t confuse this with the master policy that protects one building with multiple owners, such as policies for co-ops and condos (aka condominiums and co-operative buildings). This type of policy is the inverse of that.
What is a Master Insurance Policy?
Technically, any policy that combines multiple insurance policies is a master policy. Organizations buy master policies to insure multiple locations or subsidiaries rather than insuring each location separately. The reason is simple: A master policy can have many benefits for owners.
Benefits of a Master Policy for Building Owners
Beyond the potential savings, a master policy can offer other benefits to building owners.
Simplified Management
It’s more efficient to track and renew a single policy instead of managing individual policies with different renewal dates. This approach decreases the chances that a policy will slip through the cracks.
Cost Efficiency
Building owners also save time by evaluating coverage for the entire portfolio as a whole, instead of piecemeal. The expenses associated with each property can be broken out and invoiced separately to simplify the accounting process. It’s also much easier to budget for one policy renewal.
Scalability
Adding another building to an existing policy is generally a simple process, especially when you have an insurance partner who manages the details on your behalf.
Consistent Coverage
Having all properties on a master policy makes coverage easier to track and update compared to juggling multiple individual policies. Owners still have the flexibility of choosing different coverage for each building rather than being locked into a single level of coverage.
Stronger Relationship with an Insurer
A master policy with a single company can lead to a closer business relationship between the building owner and the insurance company. Note that all the properties on the policy need to meet the insurance company’s underwriting guidelines for the specific policy. Meeting this important requirement makes it possible to provide standard coverage for all locations. This unified approach makes the process more efficient and places building owners in the strongest position for negotiating favorable rates.
Common Misconceptions About Master Policies
A single-policy approach has many clear advantages. Unfortunately, because they are often less common, there are several misconceptions about combining policies on a single schedule.
Myth 1: Frequent Claims for One Property Will Raise the Rates for All Properties
Some people worry that having a property with excessive claims will result in cancellation of the entire policy, even for those properties with a clean history. In such circumstances, the “tainted” building can be dropped from the policy without penalizing the other locations. Owners can retain the savings from having the other properties on one master policy.
Myth 2: Owners Will Be Locked into a Fixed Property Schedule
Similarly, people often don’t realize that you can add new properties to a schedule at any time. The insurance company charges a prorated premium to cover the remainder of the policy term. Buildings can be added or subtracted from the master policy at any time. The renewal date remains the same for all buildings. Having a single due date helps ensure that coverage isn’t compromised by a missed or delayed payment.
Myth 3: Payment Terms Are Inflexible
Another common misconception involves properties where the mortgage payment includes insurance. If desired, the premium for each individual property can be billed to the bank or the client.
Property schedules are not etched in stone. An insurance policy is an active file that can be adjusted at any time during the year, adding or subtracting properties as needed. And the billing for individual locations is equally flexible.
When Should You Consider Separate Insurance Policies?
There’s no penalty or downside to inquiring about a master policy from an insurance agent or broker. Owners of multiple buildings—whether the properties are similar or not—should at least inquire about the possibility of combining their buildings in a single policy.
Choosing the Right Insurance Approach with a Master Policy
For the most options, an insurance broker who represents multiple insurance companies—compared to an agent who only represents one—is often a better choice. A broker will know which companies offer master policies that cover the area and types of buildings an owner has. A broker can also find more options that match or improve the existing coverage for each building.
To learn whether a multi-location master policy can benefit you, or if you would like a free, no-obligation insurance review, call us at 877-576-5200. 
