Frequently Asked Landlord / Building Owners Insurance Questions
Residential Buildings
For someone who just purchased a $3.4 million building, a $2.6 million policy may seem insufficient. However, the discrepancy typically comes down to the difference between market value and replacement value. Market value reflects the amount for which the land and building will likely sell in the current real estate market. Replacement value, on the other hand, reflects the cost of rebuilding the structure in a total loss. This figure doesn’t include the land value—only the structures to be replaced. (Pro tip: Construction labor and materials also increase over time. To ensure proper protection, building owners should revisit replacement value with their insurance partner at renewal.)
Rental properties have much higher risks than, say, a single-family brownstone. As the number of occupants increases, so do the risks. Landlords cannot control the actions of their tenants or their guests, and accidents happen. One of our biggest claims in recent years resulted from a tenant placing a pizza box on a gas stove. (Cardboard and pilot lights make a bad combination.)
Commercial property insurance is very complex. Two seemingly identical buildings may have drastically different risk profiles. When comparing competitive policies, check the financial rating of the underwriters. Choosing an insurance company with a C rating may save money in premiums, but the firm may not deliver at claim time. For more guidance on comparing landlord insurance policies, download our free planner.
Rental properties have much higher risks than, say, a single-family brownstone. As the number of occupants increases, so do the risks. Landlords cannot control the actions of their tenants or their guests, and accidents happen. One of our biggest claims in recent years resulted from a tenant placing a pizza box on a gas stove. (Cardboard and pilot lights make a bad combination.)
Here in the New York City area, where many properties date back more than a century, ordinance and law coverage is an important add-on. In fact, the cost is so small and the benefit so great that we always recommend including ordinance and law. This option pays for any upgrades due to changes in construction codes. For instance, if a fire damages the electrical system, a standard policy would cover replacing the system to its previous state. However, if the electrical code has changed since the system’s installation—Spoiler alert: It almost certainly has.—the owner will have to pay the difference between the old system and a new, compliant one. Ordinance and law coverage bridges this gap.
This question makes us scratch our heads. No. As a landlord, you do not have to require your tenants to have a renter’s insurance policy. That said, this practice is a really good idea. We understand not wanting to antagonize your tenants. After all, they’re your customers, and you want to start your relationship on a positive note. But renter’s insurance doesn’t cost much, and it protects them and their belongings. Explaining that your landlord insurance policy doesn’t cover their possessions will definitely strain your rapport.
The inspector will want to make sure the property is well maintained, with proper safety measures.
- Stairs should be in good working order, with sturdy railings.
- Smoke alarms need to function properly.
- Fire extinguishers should be provided in public hallways, which need to be open and free from obstruction.
- For properties with fire escapes, adjacent windows should likewise be clear, without air conditioning units or planters blocking access.
- Exit signs should be prominent.
- Electrical boxes should have working, labeled circuit breakers.
- Basements should also remain free from clutter, which means no stacks of paper or cardboard boxes—particularly near the furnace.
Generally speaking, the better maintained the building, the better it will fare during the inspection—and the more everyone will enjoy the property, including you.
One size doesn’t fit all. Certain carriers have expertise in certain property types and in certain geographic areas. Some companies don’t write coastal properties. Some specialize in brownstones, others in multi-family buildings. Our job is to match customers with the best policy for their unique needs.
We research all our partners to make sure have the proper licenses and financial strength. In fact, we don’t do business with any company that’s not A-rated.
For a list of the carriers we work with, see our Contact Us page.
Basements
Assuming that your space and building meet the necessary code requirements, you’ll want to hire a licensed design professional to prepare plans and secure the necessary permits. The DOB offers a number of online resources to help property owners check licenses and disciplinary records of construction professionals.
No. Both cellars and basements are stories that sit below curb level. However, a basement describes a space with at least half its height above curb level. A cellar has more than half its height below the curb level.
Maybe. First, the basement space needs to meet various building code requirements, including the following:
- Minimum ceiling height of seven feet
- Separate entry and exit
- Lighting, ventilation and sanitation requirements
- White or light-colored walls
- Damp- and water-proofed walls, if required by subsoil conditions (as determined by the NYC Department of Housing Preservation & Development)
- At least one window per room, with the window sill at least six inches above the bottom of the yard or other open space
Second, even if the basement meets all of the city requirements, the building itself may present additional hurdles. For example, the owner of a two-family building cannot rent a basement apartment without filing for a new certificate of occupancy. In this case, the addition of a basement would change the status from a two-family building to a multiple dwelling. This key change introduces new requirements, based on the Multiple Dwelling Law.
Nope. Cellars cannot be legally rented.