Forced Placed New York Property Insurance – a potential problem.

Forced Placed New York Property Insurance – a potential problem.

Many property owners just let a mortgage company place what is called forced placed new york property insurance on their real estate holdings. There are 2 main problems with this – the lender only cares about what they have at risk, so will only cover it for the amount they are owed nothing more. The second issue is that it does not come with any liability coverage, like for the slip & fall situations. So if this is for a rental property, you are not covered for a tenant suing you for injuries on your property.

This also holds true for those property owners and landlords who use the F.A.I.R. plan in New York – known as New York Property Underwriters Insurance Association. They are a property only company, sort of last resort choice, who also does not provide any liability protection. This is sort of like a form of forced placed new york property insurance because you cannot find a standard insurance company to cover you.

ny landlord insurance
NY Rental Property

Forced Placed New York Property Insurance – a potential problem.

So in either case I have mention, they are only concerned with a fire loss or wind damage to the property itself not lawsuits. These companies do not care if you are party to a lawsuit or have a judgement entered against you in a court of law. Since their interest is 1st and primary, they are protected from any lawsuit or judgement that may occur against your property.

The problem I have with this is, if you get sued for a slip and fall or dog bite, any judgement in New York automatically attaches to real estate you own. That is why last minute title searches are done on purchases of real property in New York, to make sure last minute judgments haven’t attached to the property. Plus, it is little known fact that a property owner can never refinance their property until that judgement is satisfied (paid off).

Forced Placed New York Property Insurance – a potential problem.

apartment building in New York
NY Apartment Building

Just know that you as a real estate investor does have other choices than the forced placed  property insurance choice. Even in the case of a landlord with many losses or claims, there are still alternatives to this way to insure your rentals. No real estate investor should have this as their only option to have insurance for their rental properties. I hope your options haven’t come down to a forced placed New York property insurance.

Tom Larsen

Landlord specialist in New York

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