Multi-Family Complexes (Apartment and Condo)



Also excluded from Covered Causes of Loss forms, but generally not insurable, are loss by wear and tear, gradual deterioration, rust, corrosion, latent defect, insect or animal damage, etc. The question is still open as to what, if any, effect the “concurrent causation” exclusionary language has on losses in these categories when damage due to any of these produces other not-excluded damage. Previously, only the excluded damage, i.e., the rust damage requiring repair, would not be covered—but resulting damage to other property would be covered. In considering what coverage to purchase, comparison of exclusions from form to form is most important.


Most insurers insist on a mandatory deductible clause applying per occurrence to all or most of the insured causes of loss. A $100 or $500 minimum deductible is common, but higher optional deductibles at progressively reduced premiums are generally also available. In deciding what level of deductible to choose, several factors should be considered:

  • A) Available premium savings in dollars compared with the insured’s probable increased participation in any future loss payments.
  • B) Past loss history—the frequency and severity of past losses as a measure of the savings or increased cost with various deductible levels. Keep in mind here that underwriters tend to become disenchanted with payment of frequent claims, irrespective of their size, so for an account that tends to generate frequent small losses, rather than attempt to collect on all of them from the insurer, an insured might be well-advised to select a higher deductible at a reduced premium and instead absorb these small losses.
  • C) Spread of risk—where there is a large enough spread of risk to give some credibility to past loss experience and high enough premium overall to offer sufficient premium savings with a higher deductible, an intelligent choice of what deductible level to purchase can be made. If this analysis is accompanied by a well-designed safety and loss control program (discussed later in this article) so that frequency and severity of...

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