Multifamily buildings that are rental properties often have individualized risk and insurance requirements. When working with the loans on the transactions, you should know how the insurance industry covers and prices them. That way, you can speed up the process of obtaining the insurance binder.

To the insurance industry, anything larger than a single family home is generally considered multifamily. If  it’s a dwelling that can house more than one family with multiple bathrooms, kitchens and bedrooms and some kind of separating  wall, It’s multifamily to the insurer.

Duplex and triplex structures and sometimes even four-plex structures generally are insured with personal-lines insurance. Commercial-lines insurance covers four-plex structures and larger multi family dwellings such as apartment buildings and condominiums.

Multifamily insurance companies have many underwriting concerns that you must meet before they insure a property. Ultimately, they want to ensure that the property is up to code and safe to inhabit. Typically, insurers will want to know about:

• The Age and Type of Wiring
• Plumbing
• Heating 
• Types of Construction
• Firewalls

Apartment buildings also present specific liability exposures. Because more than one family lives in close proximity in these structures, smoke detectors, sprinklers fire extinguishers and firewalls are especially important. Insurance companies may have coverage conditions requiring that the dwellings have a specific number of smoke detectors or fire hydrants. They also may call for certain sizes and types of fire hydrants to be in the buildings.