Common Gaps in Real Estate Insurance

Real estate owners and property managers in Rochester, NY face a wide range of risks, including tenant-related issues, severe weather, and building system failures. Yet many rely on insurance programs that leave critical exposures unaddressed. These gaps often go unnoticed until a claim arises, creating financial strain and operational challenges.

Undervalued Property

One of the most common issues in New York real estate insurance is the undervaluation of property. Rising construction costs, supply chain delays, and labor shortages have pushed replacement costs higher across the state.

Ways to avoid this gap:

• Update property valuations regularly
• Review replacement cost estimates with your insurance advisor
• Consider inflation guard endorsements
• Accurate valuations help ensure that coverage aligns with current market conditions.

Insufficient Liability Limits

Liability claims can arise from slipandfall incidents, tenant injuries, or allegations of negligence. Many real estate owners carry liability limits that are too low for today’s legal and financial environment.

To strengthen liability coverage:

• Evaluate whether your limits match the size and exposure of your portfolio
• Consider an umbrella policy for additional coverage
• Review contractual requirements from lenders or partners
• Higher limits can support long-term financial resilience

Gaps in Loss of Rental Income Coverage

When a covered loss forces tenants to vacate, rental income can drop immediately. Without adequate loss of rental income coverage, property owners may struggle to maintain mortgage payments, utilities, and operating expenses.

Avoid this gap by:

• Confirming that rental income coverage reflects actual revenue
• Ensuring the policy includes an appropriate restoration period
• Reviewing how coverage applies to partial versus full building shutdowns

Missing Equipment Breakdown Coverage

Boilers, HVAC systems, elevators, and electrical panels are essential to building operations. When these systems fail due to mechanical or electrical breakdown, the resulting costs may not be covered under a standard property policy.

To avoid this gap:

• Add equipment breakdown coverage
• Review coverage for repair and resulting property damage
• Consider coverage for business interruption caused by equipment failure

Limited Coverage for Water Damage

Water damage is one of the most common claims in New York real estate. Yet many policies limit coverage for sewer backups, sump pump failures, or water intrusion.

Strengthen your coverage by reviewing water damage exclusions and sublimits and adding sewer and drain backup endorsements.

Inadequate Coverage for Vacant or Partially Vacant Buildings

Vacancy changes how insurers view risk. Many policies reduce or exclude coverage when a building is vacant for an extended period.

Notify your insurance advisor when units or buildings become vacant. Review how vacancy affects vandalism, water damage, and liability coverage. Real estate investors with transitional properties should pay close attention to these conditions.

How Paris Kirwan Associates Helps Close Coverage Gaps

Paris Kirwan Associates works with property owners, landlords, and real estate investors across New York to identify coverage gaps and build insurance programs that align with their portfolios. Our team understands the unique challenges of managing property in Rochester, from aging buildings to shifting market conditions.

Connect with Paris Kirwan Associates to discuss your real estate insurance needs.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.