All Forum Posts by: Jack Smith

@John Hickey sounds good! I was just talking about the meet up at a not for profit event last night with Bill Fioravanti. I've got it in my calendar, see you there! Happy Thanksgiving in the meantime.

@John Hickey I think lunch sounds good. It’s nice to mix it up once in a while. 

Looking forward to it, I missed the last one. 

@John Hickey the whole situation is difficult. Insurers want to make sure they get the premiums they need to support the risk. Property owners want to make sure they are paying a reasonable amount. ACV valuations often lead to problems at time of loss when the owner doesn’t understand what depreciated value means. When a property owner does understand, and has no intention of rebuilding, then it lines up. The other important issue is the liability exposure. Trips and falls are huge exposures to landlords in the northeast and often result in substantial claims. I routinely see $30,000 or more in loss from a slip. 

So it’s really all about what risk you want to transfer and what you want to retain. 

Does that make sense? 

@Nathan Gesner very true. My post is about recommendations and mainly for small landlords in NY. Often here, even in the larger buildings landlords are requiring it as well as to be named as an additional insured on renters policies, especially in NYC.

There are considerations for those smaller landlords that just may not pertain to those of your size or in your territories.

Thanks,

So whether you are renting to families, individuals or businesses, it's important as a property owner to require your tenants carry liability insurance. Why you might ask?

Well there are several reasons for this. A simple one is to help protect your assets from the risk of lawsuit. An easy example of this is that your tenant owns a dog know to you to bite and you did not try to have the dog removed. The dog bites a visitor to your apartment building. The tenant carries no renters insurance (which includes liability coverage). So, the injured party sues the landlord as well as the dog owner. The courts will decide what happens, and this varies by state,  but had your tenant carried insurance, they would likely absorb most of the claim, if not all of it.

Second example. Your business tenant with whom you have a lease agreement, and it requires you be named as an additional insured on their commercial general liability policy, has a slip and fall accident in their store. The customer who slipped and fell files suite against you as the landlord. Since your lease requires the (business) tenant carry a commercial general liability  insurance policy , and that it names you as an additional insured on a primary and non contributory basis, you tender the suit to your insurance policy and that of your tenant. The tenants policy will respond for you, so as not to adversely affect your policy, in most cases.

While I'm not an attorney, nor play one on TV and this is not legal advise. It is good sound practice. Additionally, many insurance companies who provide insurance to landlords require written lease agreements, no smoking requirements, liability insurance from the tenants and many prefer a no animal building.

Questions?

Make sure you understand your insurance policy on the home. Many policies for a personal home exclude business pursuits and as a child sequence Air BNB would not be covered. Consult a local independent insurance agent if you aren’t sure about your policy.

Russ, so from my experience, here are the answers to your 2 excellent questions.

1. It shouldn't matter if you just purchased the property. Underwriters may want to know if there were prior losses if previously insured. For instance were there multiple water claims, so that they'll know if there's a mold exposure. However, a property not being previously insured should not stop it from being able to be insured now.

2. There are several different types of loss valuation available for property insurance. What you choose is important as it drives the rates used, the markets available, and the underwriting. All of these determine the premium, in addition to other factors like the Construction, Occupancy, Protection and other Exposures.

 The valuation methods are:

 Actual Cash Value, Functional Replacement Cost , Replacement Cost . These options are not all offered by every insurance company, or agency. Some Agencies may not sell ACV policies as they've had problems at the time of loss.

Actual Cash Value or ACV, is literally the depreciated value of the property. This will almost always be too little to rebuild the insured property with like kind and quality.  

Replacement Cost however give the policyholder, subject to coinsurance provisions, the ability to rebuilt with like kind and quality, subject to the limit of insurance, for covered causes of loss.

Functional Replacement Cost provides the ability to rebuild, subject to coinsurance with a structure that will perform the same function, but may not be of like kind and quality.

Replacement Cost values themselves are derived using appraisal software by your Agent and the Insurance Company, or an appraiser, but they are not market value estimates, they are reconstruction cost estimates. In the Hudson Valley a builders grade type home in the finished areas would generally have a replacement cost of $200.00 per square foot. Less for basements that aren't finished, garages, and decks.

So, to summarize, there are various ways to value a property like that and the way you choose varies with the insurance company and how you want to be paid if there were to be a loss.

Thanks,

Hi, I'm an Independent Insurance Agent with locations in Newburgh, Poughkeepsie, Millbrook and Montgomery NY. I work with Real Estate owners and investors of all size. I work with those who are buying to fix up and flip, as well as those buying to renovate and hold for future rental income streams, or as homes. I work with those who have multiple commercial real estate schedules as well.

So, how do you make your property more insurable? The answer to that question is tell the right true story of about your property. Let me know it's condition today, and what you are going to be doing to it, to fix it up. Be opening to understanding the valuation insurance policies use for a property when you want to insure it and how that affects any payments at the time of a claim.

Let's talk more. What questions do you have specifically?

I'm an Independent Insurance Agent/Broker with offices in Newburgh, Poughkeepsie, Montgomery and Millbrook. I do business with real estate owners all over NY State and with many who own properties all over the Country. I have access to a large number of insurance companies and will help you understand the best way to insure your investment property, home or business. My firm has been in Newburgh since 1928!