Multi-Housing News - May 2009 - (Page 13)

finance Weathering the Risks Apartment owners and managers face more risks today than ever before, including those that threaten not only the physical assets themselves, but also operating incomes By Keat Foong, Executive Editor From severe weather conditions brought on by climate change—to the effects of the economic crisis on the resident population—apartment owners and operators face unprecedented risks today. Indeed, the probability of a major hurricane striking the U.S. Coast is estimated at 74 percent, compared with the average of 52 percent over the past century, according to William Gray, a forecaster and head of the Tropical Meteorology Project at Colorado State University. A recent assessment by the Wharton School shows a dramatic surge in economic losses from natural catastrophes worldwide, up from just over $50 billion in the 1950s to almost $800 billion in the 1990s. Now more than ever, apartment companies need to make sure they have the correct insurance coverage to protect their assets from the financial effects of natural disasters. Depending on which disasters they are potentially exposed to, apartment owners may need named windstorm coverage, which protects against hurricanes that are named, such as Hurricane Katrina, advises Michael Payton, senior vice president of CAS Partners Insurance Services, Dallas, the parent company of apartment manager Riverstone Residential. Payton says hurricane damage is often excluded on policies, unless the owner specifically purchases policies that cover it. Other policies that also may be needed to cover natural disasters include earthquake insurance and flood insurance, says Payton. It’s very important to review with your agent/broker exactly what the policy covers, says J.C. Sparling, executive vice president of Mercator Risk Services Inc. “A lot of companies offer catastrophic insurance, but what is written on the policy form may not be as broad as assumed,” he warns. Payton agrees. For example, windstorm insurance covers only damage by wind and wind-driven water, and may exclude the floods that also occur in a hurricane. Thus, to cover hurricanes, apartment owners may have to purchase both windstorm and flood insurance. In particular, look out for exclusions and deductibles, warns Sparling. “Know what is covered and what is excluded,” he says. Ensure the deductibles are per building, rather than per location. “You want [the deductible] calculated on the smallest number,” he www.multi-housingnews.com | May 2009 13 http://www.multi-housingnews.com

Table of Contents for the Digital Edition of Multi-Housing News - May 2009

Multi-Housing News - May 2009
Contents
From the Editor
Executive Insight: David Picerne
Market Pulse
Investment: A Safer Haven
Finance: Weathering the Risks
Case Study: Industrial Chic
Profile: Green Properties
Technology: Social Media
Renovation Tips
Products: A Touch of Luxury
Perspective: Employee Relations

Multi-Housing News - May 2009