Insuring a rental building with 7 or more units requires special coverage. Unlike buildings with 1 to 6 units, which are covered by home insurance, larger buildings require commercial insurance due to their unique characteristics and risks.
Home insurance vs. business insurance: Some important distinctions
Buildings with 1 to 6 units are covered by home insurance. However, for buildings with 7 or more units, commercial insurance is required. A major difference lies in the exclusions relating to the risk of explosion from water- or steam-pressurized appliances, such as boilers. In home insurance, water damage related to the breakdown of sanitary installations is covered, but this protection is not included in business insurance. So it's crucial to talk to your insurer or broker to understand your coverage in these situations.
Premium factor and choice of coverage
The factors determining your premium remain similar, such as building age, construction materials, location and heating system. Additional criteria, such as the presence of leases, the type of tenancy, the presence of a caretaker/manager and preventive equipment, also influence the premium.
Civil liability and loss of income
General liability insurance is highly recommended to cover damage to third parties. In addition, insuring against loss of rent is essential to guarantee repayment of rental income in the event of uninhabitability following a loss.
Additional protection and tenant liability
In addition to the essential guarantees, endorsements are available to cover specific risks such as water damage. It's also important to stress to tenants the need to insure their property and civil liability, as this helps to avoid misunderstandings in the event of a claim.
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