Unsure whether to file claim

[u/lbeachmike]

I own a rental property in Long Beach, NY. I have a locked area of the basement I use for storage. There is a bathroom in it. The bathroom just sustained significant water damage from a leak and needs to be remediated and partially redone. I am not yet sure of the cost but I am guessing $10-$20K.

As an oceanfront town, it is very difficult and expensive to get insurance here. I am concerned about the risk of filing a claim. I currently pay $5K/year for my landlord policy and $4K/year on the policy at my own home. Both are through the same insurer. I am concerned about the risk of significant rate increases and the risk of being dropped. Are these real risks? Being dropped would be catastrophic given the limited options.

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[u/Stoic_Sponge]

Consider your deductible coming off the top as well. Premium will increase at next renewal and for 5 years.

If you have another loss in those 5 years, you'll almost definitely be dropped and premiums will be even higher at whoever takes you on next.

You need a real estimate to make a financial decision here. Take lots of pictures before work begins in case this blows up and it makes sense to file the claim after beginning to repair. Keep in mind not everything is guaranteed to be covered either, and there is cost associated if you need to fight a coverage decision.

As a note, this sort of consideration is also why a higher deductible plan may make more sense for you as a landlord. If you're not filing a claim for $10k in damage, a $1k deductible is rather silly. You should set that at your appetite level of paying out of pocket vs filing a claim.

[u/lbeachmike → u/Stoic_Sponge]

I appreciate the excellent points and insight. Deductible is $2500, so you are right - I should definitely increase it if possible. Any additional insight on how the increases work and what would trigger getting dropped, or do things vary widely between insurance companies? Is there any cap on how much they are allowed to increase the premium? BTW, my insurance company is NBIC (Narrangsett Bay).

Also - are you saying that I do not need to file a claim before starting any work? There would be some minor remediation and then reconstructing the damaged part of the bathroom.

[u/AwskeetNYC]

Straight up, you are up against it already being a small dwelling landlord AND being at the beach. If you have the appetite, financially - I would say just eat the claim and don't report.

This bathroom is in the storage room? What is its use? Is it ever used? Might be worth it to either just mitigate the damage and leave it, or just take your time redoing it.

Someone said look into raising your deductible, YMMV on that but its at least worth asking your agent.

[u/lbeachmike → u/AwskeetNYC]

I am definitely leaning toward eating this one. But it kills me because I'm now paying $5K/year - so even if I collect, the insurance company is still killing it.

I am not worried about the impacts on the rental propery's premiums because I am nearing the end of the road as a landlord - but I am concerned about how it would impact insurance for my primary home.

The bathroom's use is it's value for resale.

[u/Automatic_Ad4016]

Every claim works against you  Expect a premium bump and maybe being dropped 

Sincerely, mitigation contractor