Most homeowners are surprised to learn that repair or replacement of damaged sewer lines, water lines, or any other utility line is their responsibility, not the service providers or the towns.
Well unfortunately this is the case for the area underground on your property, usually running from the road to your house.
Damage to these service lines often occur unexpectedly, and with the expenses not covered under a basic homeowner’s insurance policy the cost could be detrimental for a homeowner. The average cost to repair ranges from $3,000 to $5,000 depending on what excavation needs to be done.
Well perhaps, but if any of these are true than you need to keep reading.
Insuring your Rental Property
The first thing you need to know is how do you insure a rental property in New York, and the answer just like most questions in the insurance industry is
The main Difference between insuring your primary home verse a rental property is that insurance carriers give you more options. And no, I am not describing how an Independent Insurance Agent can give you multiple options.
I am talking about coverage forms, underwriting guidelines, and types of policies available to you. You as the consumer get a little more choice as to how you want to insure your property. But, it is extremely important that you understand the coverage’s you choose.
So, my first question to clients or prospects is:
What is your Plan?
Is your goal to have 1 or 2 rentals or turn this into a full time job by owning dozens of units.
The reason I ask this is so I can fully explain what the best options are and how it is best suited for their goals of being a property investor. Because as you might have guessed that will depend on how they should insure it.
Type of Policy
Let’s start with the types of insurance policies available and explain the difference between them. Property Insurance policies can be written two ways. Either on Replacement or on ACV.
it is the decrease in the value of property over a period of time, usually as a result of age, wear and tear from use or economic obsolescence.
Phew, now that I brought you back to middle school and had you learn definitions, let’s talk about how it affects you.
Reasons to Insure at Replacement Cost
Insuring your property at Replacement Cost will cover you in the event of a loss to repair or replace the damaged structure at its’ pre-loss condition. This is true for both total losses and partial losses to fix or rebuild the property.
example: $30,000 worth of damage due to a kitchen fire.
Replacement cost policy will pay the total minus your deductible.
Property owners that want to make sure they have enough money to repair or replace the structure will carry Replacement Cost. Another reason to carry replacement cost is because you carry a mortgage on the property. Mortgagee’s will require their clients to carry replacement cost coverage.
Reason to Insure at Actual Cash Value
Well to be honest, the ONLY reason to insure a property at Actual Cash Value is for the overall cost savings.
Therefore, we tend to see property investors that own many properties go this route, especially when the replacement cost calculation is significantly higher than what the value of the property is.
example: The calculated replacement cost of an older multi-family house is $380,000. The property was purchased for the full market value at $70,000.
In the example above the insurance premium cost difference can be significant especially when you multiply that times the number of properties you have.
Property Investors tend to do most of the maintenance and repair work themselves or with their own employees. This can be a huge cost saver and a way to make up the difference in an ACV claim payout.
Now that you have a better understanding of Replacement Cost vs. ACV, you are all set to decide on how you want to insure your property, right?
Outside of choosing the valuation your policy is written on, you also need to understand that there are different policy forms each including specific coverage.
Everything that is included in the Basic form including Vandalism & theft plus
Weight of Ice & snow, Vehicle damage, Heating System Loss, Water damage, Freezing/broken pipes, Falling Objects, Collapse, & Electrical Damage
Special (3 form)
Includes everything above
Water Seepage or Ice Back Up, Spilled Chemicals, Overheated Appliances, dropped objects, and Accidental Damage
If your rental property is currently occupied with tenants, you should be insuring it under a Broad or Special form. This will give you a much better coverage’s and protect you in the event of a loss.
Lastly, you need to make sure you are protected in the event of a lawsuit due to injuries that occur. Whether the property is deeded to you individually or to an LLC or Corporation, you need to make sure you carry enough Liability Coverage to adequately protect you.
Since you now know the in’s and out’s of how the insurance policy is written, now you just need to find out which Insurance Company is best to write your Rental Property In New York.
Not all Insurance Companies will be the same?
Nope, wrong again, as much as everyone treats insurance like a commodity, it’s not.
Back to what I said in the beginning, It will Depend.
Each insurance carrier will offer different coverage options and policies for Landlord Insurance, with many factors affecting everything. This is why you need to find an Independent Insurance Agent that specializes in this.
This way you know the policy is going to be designed for your wants, needs, and goals in your endeavor to own rental property.
What should you do Next?
We would love to help you through this process and be the trusted Independent Insurance Agent you need to make sure you are covered the appropriate way for your rental property.
It was somewhere in the mid-1990s when blogging became the “new” thing, and it all started by keeping live journals online rather than in a diary.
Since this fad doesn’t seem to be going away, now might be time to give it a shot.
Now I should warn you that I am not the most talented writer, and if you don’t believe me I am sure we can contact my college English Professor. However, when it comes to the the things I am passionate about, I can ramble on and on forever.
At Crowley Insurance we are asked this question all the time, “Why does my auto insurance continue to go up year after year when I don’t get in any accidents and my vehicle is getting older?”
Well the bottom line is that it’s not the insurance companies fault.
Yes, I said it, stop blaming the insurance companies like they are the only reason rates continue to rise.
The constant changing in insurance rates seemed to really start during and after the financial crisis in 2008. Even though we have made significant strides since then in improving our economy, insurance rates seem to be continuing to rise and consumers are left in the dark at why.
This article was originally created by Liz Fehrman, “the intern”
As a millennial myself I can honestly say when it came to insurance I didn’t know much. All I knew was I had to pay a bill every 6 months, and it had something to do with protecting my car in case of an accident.
Now that I think about it more I realize I probably should’ve put more of an effort into understanding where my money was going. I mean, I could’ve been paying hundreds of dollars for absolutely nothing, and I wouldn’t have known a thing. It wasn’t until my first year at college that I started to ask about insurance.
October is Cyber Liability Awareness Month so it is a perfect time to make sure small businesses understand the risks and are informed that they are not safe from hackers. Small businesses are targeted at a higher rate than larger businesses says a report on cybersecurity firm Symantec. Even with multiple reports proving it, small business owners still don’t think it will happen to them.
So why do cyber criminals seek out small businesses? Well that is easy, they are easy targets. Small businesses spend less on security measures than larger companies.
The first frost has come and gone in Syracuse and it’s time to say hello fall and we will see you soon winter. Now is the time to button up some last-minute exterior maintenance and start making a list for the interior.