Natural Disaster Insurance Policies in NYC

It is readily apparent that natural disasters strike more frequently, and these events can leave devastating consequences in their wake. However, homeowners can take steps to protect themselves, and you may collect insurance payments under certain circumstances.

However, while most news coverage focuses on the human toll, which is understandable, we would like to turn our attention to what investors can do if a natural disaster affects one of your investment properties.

Understand your coverage

Renters’ insurance typically covers your tenants lost, stolen, or damaged personal goods. However, this does not cover losses incurred to your property, such as any physical damage to the apartment.

A landlord’s policy is more extensive than a renter’s or a typical homeowner’s policy. But, you need to check the policy and understand what it covers and, perhaps more importantly, what your responsibility is. You should know your deductible and what events trigger a claim. For instance, most policies do not cover flood damage. Knowing if your policy covers lost rental income due to habitability and potential injury is essential.

If you do not understand anything, you should ask your insurance agent before disaster striking.

Keep orderly records

You should have your property and insurance records in a safe place. Then, once disaster hits, ensure your estimates and receipts keep track of the required costs to fix your property.

This takes on an added level of complexity for real estate investors, who may have multiple properties.

Tenants

Many leases allow landlords to exit the agreement if a disaster is too hit, providing it is not a rent-stabilized building. Assuming tenants can safely habitat the unit, a typical tenant’s clause allows them to break the lease if the problem is not fixed within 30 days.

You may also find you can continue to charge rent. However, it would help if you prepared for a backlash. Aside from the bad publicity; under New York State’s Warranty of Habitability, owners generally have to provide a property where the tenant has a living condition and does not present a danger to their life, health, and safety (this warranty does not extend to a tenant that caused the damage).

Have a reliable contractor

As a property owner, one way to catapult to the top of the list is to do a lot of business and refer others to them. Hopefully, as a property owner, you have established strong connections with general contractors and repair personnel such as electricians and plumbers. Remember, many people are likely trying to reach them in the aftermath of a disaster.

Co-ops and condos

Investors avoid buying co-op units since rules limit shareholders’ ability to sublet. Therefore, New York City investors typically turn to condos due to the board’s less restrictive rules. In addition, the building’s policy will likely cover external damage, such as roof, façade, and landscaping. While you do not have to concern yourself with these aspects, you still need the policy to cover the unit’s damage.