NYC Insurance Blog

The Ins and Outs of Landlord Insurance in New York

Which insurance policy do you need as a landlord? Landlord insurance is crucial to New York property owners because it protects them from liability and potential risks. Landlord insurance is a prerequisite to most lenders. Therefore, a lender may specify the coverage and how much coverage you must obtain. Remember, it is important to ask the right questions and research to make the right choice. Continue reading to understand more about landlord insurance in New York. 

Types of Policies You Should Consider

You must determine the level of protection you need as a property owner. Here are the three types of policies you should consider:

Basic form coverage

This is the cheapest form of coverage for landlords because it only covers a few perils named in the policy. Although covered events can vary from one insurance company to another, payments are usually in actual cash value. When an insurer pays the actual cash value of an item, the coverage is less, i.e., the depreciated cost of an item. 

Broad form coverage

Although it is a named peril policy, the named perils are extensive or more unlike in basic form coverage. It is also essential to understand that the policy pays the replacement cost value of an item. The policy is an excellent option for landlords who want to avoid paying out of pocket when disaster hits. Typically, broad form coverage does not offer coverage to rental properties vacant for a month or two. Ergo, talk to your insurance agent to determine the specifics of your insurance policy.

Special form coverage

Although special form coverage is costly, it provides coverage to numerous perils. Since it is difficult for the insurer to name all the risks, they choose to name events that are not covered by the policy, for example, war and government action. You can rest assured that the policy is an excellent choice because you get the replacement cost value of an item. This means the insurer will pay the item's replacement cost, not the actual cash value for repair or replacement. 

Landlords have different coverage needs and estimated budgets. Therefore, consider talking to your insurance agent to choose a policy that suits you and your New York estate. Understanding your coverages is important, give us a call today, for a free quote!

Additional Insurance Coverage

What type of additional coverage should you purchase? An insurance broker can offer professional advice and opinion on additional insurance coverage depending on your needs. Be that as it may, here are additional coverage you should consider:

Guaranteed Income Insurance

Landlords consider their rental property as a source of income. If they become uninhabitable due to a covered peril, for example, vandalism or fire, this additional insurance coverage ensures you don't lose rent while the building is being repaired. The insurer pays the rental income if your property is not inhabited because of pest infestation or any covered risk. Remember, guaranteed insurance coverage does not cover loss of rent arising from landlord/tenant conflicts. Also, loss of rent coverage has a time limit.

Sewer backup

Your standard landlord insurance policy does not include water liability or a sewer backup. Therefore, since landlords incur water damage losses, it is important to add this coverage. 

Law coverage

Real estate property must meet the set standards for the safety of the tenants and the general public. The insurer will cover all the costs if your property is damaged and needs repair or rebuilding. If the building codes have changed, you must meet the new or current standards. Without the law coverage insurance, you can incur additional costs during a renovation, repair, or rebuilding. With ordinance coverage, you can have peace of mind knowing that your insurer takes care of everything. 

Other perils

A standard landlord insurance policy only covers a few events. Depending on your location, budget, and preference, you can include other perils in the policy, for example, flooding and earthquake. 

Liability Insurance

Landlord insurance protects you legally if someone is injured on your property. Landlords can be sued by their tenants, visitors, or traders. For example, if a tenant slips and falls, breaking a bone on your property, they can sue you. If you are found legally responsible, you can incur medical, legal, and other costs depending on the severity of the situation. However, with liability insurance, your insurer will try to reach a settlement with the involved party and pay all the associated costs. It is important to understand that if a tenant's visitor gets injured on your property, there is a high possibility that the tenant's renters insurance would cover the liability. The bottom line, if the landlord is negligent, he is liable. Here are some of the ways you can reduce potential liability:

• Inspect your property and conduct routine maintenance practices
• Comply and stay up to date with set building and safety codes
• Prepare well for the winter season. You can reduce potential liability by clearing ice and snow regularly
• Make repairs and ensure your property is secure and well lit. 

It is essential to limit your risk as a property owner. Before you rent out your property, follow these steps:

• Clean, repair, and prep the unit to reduce injury possibilities.
• Consult and work with an attorney. An attorney can help you draft a lease using the correct language to provide maximum protection.
• Purchase the maximum amount of landlord insurance from a reputable insurance company. You can purchase additional insurance coverages to ensure you are adequately protected.
• Ensure your tenants have renters’ insurance. Ask them to provide proof of insurance before signing the lease to avoid potential liability. 
• Put your property into an LLC. This helps you protect your personal assets if a tenant or someone else files a lawsuit.

Landlord Insurance Vs. Renters Insurance

Landlord insurance covers damage to your property from covered perils like fire, theft, snow, wind, or hail. Also, the policy covers personal property, including televisions, kitchen appliances, furniture, washing machines, etc., onsite for tenant use. However, landlord insurance does not cover tenants' personal property. For this reason, your tenants must purchase a renters insurance policy. If it is optional for tenants to take out renters’ insurance, inform them in writing that you recommend they buy the policy. Renters' insurance should have an indemnity clause shielding you (the landlord) from any damages or liability incurred on the property. Having a Broker, will help with claims, understanding coverages, and what you and your tenants are responsible for.

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