What does apartment building insurance typically not cover?

Standard apartment building insurance policies contain a number of exclusions that owners should understand. The most significant exclusions include flood damage (requires a separate flood policy as mandated by the National Flood Insurance Act of 1968, 42 U.S.C. § 4001 et seq., for properties in flood zones), earthquake damage (requires a separate earthquake policy), pollution and environmental contamination (requires a pollution liability policy), and acts of war or terrorism (terrorism coverage is available through a separate endorsement under the Terrorism Risk Insurance Act, 15 U.S.C. § 6701).

Additional exclusions typically include normal wear and tear, gradual deterioration, settling, cracking, or expansion of foundations, damage from insects or vermin, mechanical breakdown of equipment (covered by equipment breakdown insurance), losses resulting from the owner's intentional acts, losses due to faulty workmanship or design defects, and damage from governmental or regulatory action. These standard exclusions are codified in the ISO Commercial Property Causes of Loss forms (CP 10 10, CP 10 20, and CP 10 30), which most commercial property insurers use as the basis for their policy language.

Some exclusions can be addressed by purchasing additional coverages or endorsements. Others, like wear and tear, are simply the owner's responsibility as part of normal property maintenance. Understanding your policy's exclusions is essential for identifying coverage gaps and determining whether additional policies or endorsements are needed to adequately protect the property.