What insurance gaps exist during apartment building renovations?

Apartment renovations create a complex insurance environment where multiple coverage gaps can emerge simultaneously. The most common gaps include the vacancy clause activation (ISO CP 00 90 reduces coverage when the building falls below 31% occupancy for 60+ days during a gut renovation), the standard property policy's exclusion for buildings under construction or renovation, contractor insurance coordination failures, and the lack of builders risk coverage for the renovation scope.

A comprehensive renovation insurance checklist should address the following. First, notify your property insurer of the renovation scope and timeline. Some policies require advance notice of renovations exceeding a specified value or involving structural changes. Second, obtain builders risk coverage for the renovation work if the scope exceeds cosmetic updates. Per the Fannie Mae Multifamily Selling and Servicing Guide, builders risk is required when the renovation exceeds 20% of the property value. Third, require all contractors to carry general liability (minimum $1,000,000 per occurrence), workers compensation, and commercial auto insurance, and to name the property owner as additional insured on their liability policies.

Fourth, verify that the contractor's general liability policy does not contain a residential exclusion (ISO endorsement CG 22 42 or CG 22 43), which would eliminate coverage for work on residential properties. Fifth, confirm that your umbrella policy extends over the contractor's additional insured coverage. Sixth, obtain an installation floater if fixtures, equipment, or materials of significant value are being installed. Seventh, review whether the renovation triggers ordinance or law requirements that will increase the total project cost above the original estimate. Each of these items represents a potential coverage gap that, if unaddressed, leaves the apartment owner exposed to uninsured losses during the renovation period.