For starters, many have substantially reduced your coverage. They have done this by capping the period for reasonable restoration of the building at a dollar amount or for a period of one year. In New York City, if you have a major fire in your building, your residents may be out of their apartments for up to two years. If the building has a one-year cap, it could be out a year of maintenance. To top it off, clients are still paying relatively the same premiums despite this significant reduction in coverage.
So, on the one hand, New York has a public safety policy to evacuate people before a major storm hits. On the other hand, the insurer can say that, under the policy, you have no coverage for it. Consequently, people are forced into an unfortunate choice: do they want to incur that expense out of their own pocket or do they just decide to ride out the storm? Does it make sense to have that kind of disconnect between a sane policy for public safety and an insurance policy for coverage?
What should boards do? They need write to the New York State’s Department of Financial Services’ Superintendent of Insurance and request that an emergency regulation be issued that would modify the civil authority insurance clauses in residential property insurance policies by extending the civil authority coverage period to (1) no less than the period of the evacuation or vacate order and (2) for such reasonable additional period deemed necessary by the co-op or condo boards for the health and safety of their residents up to the policy period limit for loss of business income.
When renewing their building’s policies, boards should seek coverage that provides a business income period cap of two years.