How Small NYC Building Owners Can Battle Rising Insurance Rates

Owners of small buildings in New York City are facing an almost impossible insurance market with:

• Rising rates
• Fewer carrier options
• Premium spikes
• Upfront payment demands

Insurance costs for multifamily buildings in New York City have climbed sharply. According to the Real Estate Board of New York, average insurance expenses have more than doubled since 2017. For many small building owners, insurance has quickly become one of the fastest-growing operating expenses.

The good news: By understanding how insurers evaluate risk and how to make a property look less risky, building owners can tilt the odds in their favor.

Why Some Buildings Get Better Insurance Terms Than Others

Insurance companies now evaluate buildings individually. Two seemingly similar buildings in New York City may be charged widely different insurance premiums. One may qualify for competing offers from several insurers, while the owner of a neighboring building may have to scramble to secure a single offer at a much higher premium.

In brief, underwriters evaluate three factors when deciding whether to insure a building and how much to charge:

• Condition of the building, including repairs and maintenance.
• Controls the owner has in place for safety, security, maintenance, and compliance with NYC laws.
• Claims history of the property.

A building where the owner can demonstrate that maintenance and repairs are done proactively, rather than waiting until issues occur, is much more attractive to an insurer.

What Insurance Underwriters Are Scrutinizing More Closely

The first step to winning the insurance game is to view a building through an insurance underwriter’s eyes. Here are the things they examine closely, which can lead to higher premiums or coverage denial:

• Boiler/Plumbing age and condition
• Electrical updates age and type
• Inspection documentation
• Life safety issues, including safety and security technology and policies
• Maintenance records
• Open violations
• Roof condition and age
• Sidewalk hazards and maintenance
• Water loss history

In short, insurance underwriters look for potential risks that can lead to claims. There are several things small building owners in New York City can do to reduce those risks.

Risk Management Measures NYC Owners Can Take Now

There are three areas that insurance inspectors tend to emphasize: the potential for water damage, sidewalk safety, and documented policies that reduce risk. Here’s what small building owners can do to make their buildings more attractive to insurance companies.

Water Damage Controls

• Leak detection, including both regular inspections and water/leak detection sensors and other technology
• Boiler/Plumbing checks: Annual inspections are required by New York City for most systems. Make sure inspection reports and other paperwork and permits are available for insurers to review.
• Roof inspections annually and after major weather events; roofs over 10 years old should be inspected twice a year
• Freeze prevention sensors and technology

Exterior & Sidewalk Risk

• Routine inspections of sidewalks and exteriors to reduce the risks of slips and falls
• Photo logs and written documentation of all repairs and maintenance, including time-stamped photos demonstrating compliance with New York snow removal regulations
• Professional evaluations, in addition to owner inspections, in cases of uncertainty
• Permit/Application screenshots and archived copies of applications and communications with city officials

Documentation Habits

• Inspection logs for every inspection; ideally with specific weekly, monthly, semi-annual and annual inspection items
• Contractor reports for all projects, which detail the work and results
• Before and after photos of all repairs and maintenance, including time stamps
• Violation clearance proof and all inspection reports and sign-offs

Not only will these measures ease the insurance application and renewal process, but they will also help building owners and insurers defend against claims. Insurers favor building owners who make their lives easier.

Do Security Cameras Reduce Liability Risk?

Unfortunately, security cameras won’t lower insurance premiums, but smart building owners should seriously consider installing them for other reasons.

In the event of a slip-and-fall or other potential insurance claim, clear video from a security camera can be a strong defense against liability. Cameras won’t replace regular maintenance, but they can provide proof that a building is well-maintained and help defend against fraud.

Keep in mind that dark, grainy video is much less helpful when defending against insurance claims, so installing a high-quality system is worth every penny. Make sure to retain footage for a long time in case claims surface weeks or months after an incident or alleged incident.

New York City Sidewalk Exposure: Small Defects Can Lead to Big Claims

Falls are a leading cause of injuries in New York City and are a major insurance and liability exposure for building owners. Small building owners are generally responsible for maintaining the sidewalks around their buildings, and they may be liable if someone is injured.

Owner responsibilities include repairs, maintenance, removal of snow, ice, and debris, and virtually anything that makes a sidewalk less safe.

Sidewalks should be inspected regularly, and those inspections should be documented by time-stamped photos or video. In addition, encourage staff and tenants to report any damaged, cracked or uneven sections, and have those sections repaired or replaced by a professional as quickly as possible.

Claims arising from slips and falls on sidewalks can drive premium increases, higher deductibles, or even reduced coverage availability. Small NYC building owners should do everything possible to mitigate those risks.

Why Some Small NYC Buildings Qualify for Better Insurance Terms

Buildings that receive more favorable treatment from insurance companies have owners who avoid these red flags:

• Recent violations or a history of violations
• Recent or multiple claims
• Aging mechanical systems, including plumbing and electricity
• Aging roof, windows, or other important structural parts
• No monitoring technology to provide early warning of leaks and other issues
• No security technology
• No documented, regular inspections
• No documented regular or seasonal maintenance and repairs

These are some of the issues an insurance underwriter will use to determine whether a building is offered insurance and, if so, the premium amount.

In fact, small property owners who take a proactive approach to building management may qualify for insurance coverage that combines exceptional value with attractive premiums. The New York Brick & Brownstone Insurance program is designed for small, well-maintained buildings in Manhattan, Brooklyn, and Queens. Available for condos, co-ops, brownstones, row housing, and apartment buildings, this program can provide an insurance option for buildings of 1-30 units that are at least 50% residential.

When to Request a Risk Review

Whenever something significant changes in a building or an insurance policy, a risk review by an insurance professional is a smart idea.

These building changes mean it’s time for a review:

• Planned renovations or upgrades
• Significant repairs or replacements
• New on-site technology
• Ownership changes, such as adding or dropping a person from the ownership group

These changes in insurance should also trigger a review:

• Premium increase
• Non-renewal notice
• Change in amount or type of coverage
• Claims history changes

If the most recent claim is now five years old, or a building violation has been resolved, ask the current insurer to reevaluate your policy (or get proposals from other companies). If a boiler or roof is being replaced, or a new access control system is being installed, make sure the insurance company knows.

Stu Cohen and his team at the City Building Owners Insurance program work as advocates for small building owners, helping them make their properties more attractive to insurers while reducing potential risks and liabilities. Risk reviews are an important part of our process. For more information, please call our office at 877-576-5200 or request a free, no-obligation landlord insurance review.