Insurance is set by the contract and typically includes commercial general liability, all-risk, property and worker's compensation coverage to name a few. As a general matter, I would recommend that you find a U.S. insurance agent who has experience providing coverage for multi-family properties and that person could ensure that you had sufficient coverage which you could include in your leases with each tenant.
What insurance requirements are binding for a foreign-based landlord of a multi-family property?
We are researching insurance requirements for a foreign asset management company expanding our U.S. portfolio with the purchase of a multi-family property in Florida. The value of the property will be between $100-$150 million. We'd rather not be working with a third party property management company. We'd like to add our own management department. As a China-based property owner, what insurance requirements should be necessary?
This is a very broad question. As far as legal requirements to carry insurance, there are statutory requirements to carry workers' compensation insurance to cover for injuries suffered by employees in the course of their employment. There are also certain requirements to carry health, disability and other insurance for employees, which can vary by state and can also be required under certain union contracts if you have employees that are members of a union that have these requirements in the applicable collective bargaining agreement with the union. Generally, there is not a requirement to carry liability insurance but any significant (or even insignificant) business should carry a liability policy; the question will be more a matter of what insurance limits are appropriate for your business. Finally, for owning real estate, there is not a requirement by law to carry casualty insurance to ensure over damage caused by fire or other cause, but it would be very imprudent not to carry such a policy for a property owner. If you have to finance for the properties you own, lenders routinely require casualty and liability policies and have specific standards that their borrowers must satisfy. Often, depending on the location of the property, they might also require terrorism insurance or, if the property has had some environmental issues, environmental insurance. It would be prudent to consult with a highly regarded US insurance consultant to advise you about what coverages are right for you and/or for the properties you own.
There are no binding insurance requirements in California (Varies for each state). I'm not familiar with the requirements in Florida. However, the standard recommendation for all multi-family property is: Hazard Insurance, Umbrella Insurance, Environmental Insurance, Earthquake Insurance.
Based on my own experience, and I have inquired of several other of my firm's other real estate lawyers across the country including Florida, I do not believe that Chinese or other foreign owners of real estate are subject to any special insurance requirements. If your question is broader, i.e. you want to know what insurance is usually obtained by any owner of real estate, please let me know.
There are numerous insurance policy types that a company or entity should/could have to cover a property like this. They include Property (the buildings/contents), Income (loss of income generated by the Property), General Liability (slips and falls, etc.), and Excess Liability (an umbrella/blanket policy). Many factors should be taken into account when considering insurance for a property of this type, including age, location, tenant profile, vacancy rates, owner risk tolerance, etc. Some entities also consider various forms of self-insurance to replace portions of coverage normally provided by insurers.