SWG Property: 6 Risks That Keep Apartment House Managers Up At Night

Dec 2020

From catastrophic damage to unexpected vacancies to disgruntled tenants, apartment house owners have their share of risks to consider. Tenants and businesses look to them for fair and timely responses during a crisis, and if these residents and business owners feel the response didn’t go far enough in their favour, they can opt to take the property manager to court.


Apartment house managers need insurance coverage that’s tailored to their unique risks. South Western Group is a trusted name in Property Insurance and provides coverage uniquely designed for this market.


For brokers looking to serve this property niche, here are some of the most common insurance risks that keep property managers up at night.


Apartment Houses: 6 Common Litigation Risks and Potential Losses


1) Business interruption

Business Interruption includes loss of income from rentals, such as vacancies. For example, the 2019 fire that ravaged a building in downtown Windsor forced out 200 tenants and 30 businesses. Because of the extent of the damage, the building owners have still not been able to let back in their residents, who have since filed a lawsuit against the property owners. (1) In the event of a catastrophe, building owners will have more than just reconstruction costs to worry about.


2) Catastrophic damage

Floods, fire, earthquakes, and other types of catastrophic damage can lead to exponential losses. This is especially true for vacant properties, where no one is immediately available to assess the situation.


A recent example is the Fort McMurrary spring flooding in June of this year. Rising water levels triggered by a melting ice jam in Athabasca River caused damage to more than 1,200 structures, many of which were commercial properties, and cost insurers about $228 million. (2)


3) Sewer backup

Sewer backup seems to go hand in hand with flood risk, but backup can also be caused by heavy rains, snow accumulation on the roof, and cracked or broken pipes.


In the case of a family in Saint John sued a property management company after sewage backup in their rented apartment. They claimed a mishandled plumbing job caused sewage to spill from the apartments above and onto the floor of their basement. The case is still ongoing and the tenants still claim that the property management company owes them compensation for damages and hours of lost work. Meanwhile, the landlord claims that his company responded appropriately and that the tenants should have taken out a renter’s insurance policy to cover the damages. (3)


4) Personal injury

Personal Injury includes injuries to visitors, employees, and tenants. Property owners can be sued for alleged negligence if a party feels the owner could have prevented an injury or death from occurring. For example, they could be sued for negligent security after a fatal shooting.


5) Employees and tenants

Cases against commercial property owners are common in strata housing, and depending on the type of building, court cases arising from the actions of tenants or employees can get complicated. For example, in one Surrey, BC case, the owner of a strata unit sued a neighbouring owner because of nuisance that arose from the actions of a residential tenant. This sparked a debate among the judges over who was liable for water leakage from a tenant’s apartment. (4) Whether or not the property owner is at fault, lawsuits arising from disgruntled employees and tenants can drag on for months and lead to hefty legal expenses.


6) Crime

Crime includes theft as well as employee dishonesty and broad form money and securities.


SWG’s Commercial Property Insurance: Apartment Houses


SWG PROPERTY – Commercial Property insurance is designed to cover hard-to-place property accounts. We can accommodate most realty-type risks, from stand-alone rentals and vacant dwellings, to large commercial risks, with an in-house capacity of up to $6,000,000.


Coverage highlights:

● Broad Form or Named Perils

● Replacement Cost


● Dependent on individual risk, construction, occupancy and town grade

Other coverages include:

● Business Interruption, Rental Income

● Flood, Quake, Sewer Backup

● Crime – including Employee Dishonesty & Broad Form Money & Securities, Mechanical Breakdown


Most realty type risks are written on a “Premises” type form but full CGLs including Tenant’s Legal Liability are available.


Visit our product page for more details.


Content is current as of the date of broadcast and is subject to change without notice.



  1. https://www.cbc.ca/news/canada/windsor/westcourt-fire-one-year-later-1.5794712
  2. https://www.canadianmanufacturing.com/environment-and-safety/fort-mcmurray-flooding-causes-over-228m-in-insured-damage-254737/
  3. https://www.cbc.ca/news/canada/new-brunswick/landlord-tenants-apartment-house-dispute-court-1.5081779
  4. https://www.canadianunderwriter.ca/legal/landlord-sued-16000-water-leak-wins-appeal-1004149250/