What is Homeowners Insurance and Do I Need it in NYC?

While some may consider homeowners insurance as an unnecessary expense, the truth is that it's a crucial investment for anyone who wants to feel secure.

Think about it - in case of a fire, theft, explosion, or water damage from a burst pipe, would you prefer to bear the entire replacement cost of your belongings, including furniture, electronics, clothes, and more, or have insurance that covers the expenses?

By skipping it, you'll expose yourself to an unnecessary financial risk that may cost you even more in the long run. So, weigh the options and make the smart call today for a safer tomorrow.

Getting Homeowners Insurance in New York

• Homeowners insurance protects your home and possessions in case of damage or loss due to theft, fire, or vandalism. It can also cover cases of liability or bodily damage.
• While it isn't the law to own home insurance in New York State, your mortgage company will require you to purchase this coverage in order to give you a loan commitment.
• In addition, if purchasing in a co-op or condo in New York, you must buy insurance for your unit separately.
• You'll need to purchase additional insurance for flooding. Getting flood insurance is advisable, especially if you live in a flood zone.
• Purchasing an umbrella policy is an option to cover items not typically covered by homeowners insurance.
• Insurance rates in New York are typically higher than the national average.

What is Homeowners Insurance?

Homeowners insurance protects your home and possessions against damage, theft, fire, or vandalism. It also covers liability or bodily damage.

If someone is injured on your property, you’ll be covered.

Say your dog bites your neighbor, and your insurer will pay for his medical expenses.

If your neighbor comes over again after the injury and breaks your expensive blue-and-white ginger jar, you can file a claim for reimbursement.

If your neighbor comes around again a little later and slips on the broken pieces of your ginger jar that you had not cleaned up and successfully sued you for pain and suffering or lost wages, you’re also covered for that.

Do I Need Homeowners Insurance?

Absolutely! Homeowners insurance is not an afterthought or a luxury.

Property insurance is not required in New York state by law, but if you buy an apartment, banks and mortgage companies require it before issuing you a loan.

Mortgage companies even insist that your insurance covers your apartment's full or fair value and will refuse your loan without proof.

And if you still can’t get over that, you must have homeowners insurance; keep in mind that even renters who don’t own their apartments need coverage as well.

Many landlords insist that renters purchase renters’ insurance.

What Exactly Does Home Insurance Cover?

While coverage may vary from policy to policy, as well as in what neighborhood you live in, homeowners insurance can cover a lot more than you think and offers you peace of mind and the financial protection you need in the event of a disaster or accident in your home.

Various Disasters

A homeowner policy covers the interior and exterior of your home due to destruction and damage.

This includes fire, hurricanes, lightning, vandalism, and other disasters.

Your insurer will compensate you so your home can be repaired and even completely rebuilt.

Personal Liability

Homeowners insurance also covers the loss or theft of your possessions and harm to others.

But the most important thing about having insurance is that it covers leakage and overflows from bathtubs, sinks, and toilets that cause damage to your neighbor’s property.

Overflow coverage is necessary when living in an apartment building with an apartment below you.

The most common damage is when an overflow in your apartment causes water damage to the ceiling of the neighbor below you.

Will My Valuables Be Covered Under Home Insurance?

Suppose you own priceless possessions or expensive things like fine jewelry, antiques, vintage or designer clothes, or fine art. In that case, your insurance will not cover the total cost of these items.

Here, the solution would be to up your home insurance by paying extra to put your valuables on an itemized schedule or even purchase a separate policy if you want your de Kooning to be fully insured.

You can also purchase a rider, an insurance policy provision that adds benefits to or amends the terms of a basic homeowners insurance policy.

Although you’ll be hit with an additional cost, most riders are low in charge because they involve minimal underwriting.

Is My Pet Covered By Homeowners Insurance?

Your liability insurance will cover your dog if he or she bites someone, resulting in an injury.

You'll be fine if you notify your insurance that Fido is a family member.

But damages caused by your dog aren’t covered, such as if it chews on your furniture or damages someone else’s property.

Those costs are out of pocket.

It’s also important to know that certain breeds of dogs are not covered by homeowners insurance.

These dogs, such as Pitbulls or Rottweilers, have been known to pose a risk.

Do You need Homeowner's insurance if I live in New York City?

Home insurance is not a legal requirement in New York. However, if you are taking out a mortgage, your lender may require you to have some form of coverage. This means that in most cases if you are buying a co-op or condo, your mortgage lender will ask for proof of insurance before approving your purchase.

Do I Need Insurance If My Condo or Co-op is Already Covered?

First, let’s clarify that there are two types of apartment dwellings in New York City: co-ops and condos.

What is a co-op? It’s short for “cooperative” housing. It means you’re a member living in a place with other residents.

You are not an owner of a co-op apartment; instead, you own shares in the whole complex.

In contrast, you are the owner if you purchase a condominium unit.

Building Insurance

According to the Insurance Information Institute, condos and co-ops need separate policies.

As we discussed, the first is the homeowners' insurance, which provides coverage for any structural improvements to your apartment.

It also covers your personal possessions, just like other policies outside of New York City. Finally, it provides coverage if you are involved in a disaster, such as fire or theft.

Insurance for the Unit

The condo or co-op board provides the second insurance.

Called a “master policy,” this covers the common areas you share with others in your building, like the basement, elevator, boiler, roof, and walkways for both liability and physical damage.

If this seems excessive, get a copy of your building’s bylaws and determine what is covered and what type of insurance you need.

This is important, especially when, during the closing of your apartment and at the last minute, you learn that the bylaws for your building require you to be responsible for everything in the building complex.

Seriously, it has happened!

Note that there is a difference in master policy between a co-op and a condo.

Your mortgage lender requires you to have homeowner’s insurance, but if you own a co-op, the lender is fine with you having been added to the building’s master policy.

Your lender wants the assurance. But banks are more strict with condos.

Lenders require that you pay for the master policy.

What is the same for a co-op or a condo is that when you buy either one, you are already joining into a pre-established contract, which is that you agree to pay for your share of the building’s master policy, which covers the common areas of the dwelling and the exterior.

To learn more, read What's the Difference Between an NYC Co-op and a Condo.

What is Not Covered Under Homeowners Insurance?

If you thought your co-op or condo in New York City covered disasters like floods because it already covered damages from fire and smoke, think again.

Homeowners insurance doesn't cover what is known as natural disasters or "acts of God."

So floods, hurricanes, and earthquakes aren't covered, so you may need to renew your insurance to provide the necessary coverage.

Flood Insurance

You don't need earthquake riders or an extra policy in New York City.

But you need to pay extra for flood insurance, as New York City is known to lenders as a flood-prone area.

Before buying an apartment in the city, the best thing to do is to check online for a flood map that shows whether or not you are in a flood zone.

Adding flood insurance has a high deductible and can be very expensive.

Flood insurance premiums in NYC can range from under $800 to over $4,000 per year, depending on the flood zone, building elevation, and insurer (NFIP vs. private). It’s best to use FEMA flood maps and get personalized quotes.

Often, owners are dumbfounded that they need flood insurance in New York City because it seems to make sense that their insurance would cover it.

But what is considered flood damage that needs to be covered by extra insurance?

The answer is that the source of water is the determining factor.

For example, if a pipe bursts in your kitchen and floods it, that doesn't need extra coverage because even the most basic homeowners insurance will cover it.

But if water from torrential rain happens outdoors before entering your apartment, that's considered a flood and not covered under your insurance.

The most common claim, as discussed, is water damage or overflow from your bathroom or kitchen that damages the apartment below you.

As a result, the damages are widely known to be very expensive to fix.

Most insurance policies come with $100,000 worth of liability coverage, but since water damage happens often in apartment buildings, it's wise to pay extra for added coverage.

And besides, it doesn't cost a lot.

For example, the difference between $100,000 and $1 million of coverage is around $60 to $70 a year.

How Much Does Homeowners Insurance Cost?

A basic policy costs around $300 to $400 a year and covers contents (furniture, clothes, etc.) up to $25,000, walls and floors up to $20,000, and up to $100,000 of liability claims.

That's not much, considering what is covered.

For a little more, $400 to $600 a year covers contents, walls, and floors up to $50,000 and up to $300,000 of liability claims.

The more expensive your apartment costs—say, high in the six figures or above—the more you'll want to pay extra for home insurance.

In this case, your insurance will cost you somewhere between $1,100 to $2,400 annually and will ensure, for example, a 1,100-square-foot co-op or condo.

You'll get $100,000 for contents, $300,000 for walls and floors, and $1 million in liability coverage.

The takeaway here that you should note is that the experts at the Insurance Information Institute recommend that you have at least $300,000 worth of coverage.

For this kind of coverage, you won't go broke. For extra protection, a few hundred dollars more in premiums can buy you an extra $1 million or more through an umbrella policy.

What is an Umbrella Policy, and Do I Need It?

It's up to you.

Umbrella insurance adds extra liability coverage that tops your homeowner (or auto) insurance.

It is meant to protect you from liability claims or judgments that go beyond what your essential homeowner's insurance policy covers.

How Do You Get Homeowners Insurance?

Homeowners insurance is more involved but not so different from getting renters or auto insurance.

You'll need to speak directly to an agent about a custom quote.

While we can discuss the average cost, the reality is that every quote is different, as each homeowner has different needs and a different type of property.

Will the Insurance Company Check My Credit?

Yes, your credit score will be pulled, but it will most likely be a soft inquiry, meaning your credit score won't be affected.

However, it's bad news if your credit isn't that great or even poor, as you'll probably be denied.

What else is considered eligible to qualify for homeowner insurance?

The condition and value of the home are also considered, as well as whether the insurance company wants to take the risk.

You can be denied if your home lacks specific safety measures, such as smoke or carbon monoxide detectors, or requires repairs and renovations.

You may even be required to install a home security system for approval.

You should be sincere as to the condition of your home, as it's not unusual for insurance companies to send someone to inspect the premises if they are in doubt.

Home Insurance Companies That Cover New York City Apartments

Home insurance companies that serve New York City include State Farm, NYCM Insurance, Travelers, and Preferred Insurance.

Do your research, as you're bound to find a manageable policy.

Home insurance prices in New York vary depending on your chosen insurance company.

Below is a list of rates we ascertained for introductory home insurance rates in New York by company.

The average annual homeowners insurance premium in New York City ranges between $2,100 and $2,400, depending on the borough and building type. This is significantly higher than the national average, which sits around $1,900.

At around $740 a year, you can add on riders to protect your valuable possessions and increase your rates for more protection without much of a bump in terms of price.

You can find cheap homeowners insurance by checking out the most affordable New York carriers below.

Rates listed here are illustrative and may have changed since the time of publication. Always compare real-time quotes from multiple providers.

What Factors Affect Home Insurance Rates?

According to the Insurance Information Institute, home insurance rates are determined by your home's square footage, location, local crime rates, and whether you live in an area prone to disasters like hurricanes.

However, home insurance rates are primarily determined by how much you use your insurance.

Homeowners insurance is similar to auto insurance, where your rates keep increasing when you have had too many accidents.

Frequencies, such as past home insurance claims by the homeowner, the severity of each claim, and the homeowner's credit score, affect how much you will pay each month.

If that occurs or describes your situation, your insurer will consider you a "risk."

And if you are determined to be a "risk," you will significantly increase your insurance to a higher pricing tier.

If you file frequent or high-value claims, your insurer may choose not to renew your policy at the end of its term. This is more common if claims indicate ongoing risk or poor maintenance

How Can You Save Money on Insurance Without Increasing Your Deductible?

In New York City, an apartment may typically be more expensive if it has a doorman or a security guard.

The lobby must have cameras to capture an intruder coming in, and some of the best or most luxurious apartment buildings have multiple security guards or doorkeepers on duty simultaneously and have elevators where only the unit's owner can enter. As a result, a critical installation or an ID card.

All of this is to say that the safer your apartment in New York City is, the more you’ll save on insurance.

A central fire station fire alarm system or living in a fire-resistant building also brings down the cost of your insurance.

And since these apartments are in established and very safe neighborhoods with low or no crime rates, your policy will become even more manageable.

Is Condo Insurance the Same As Homeowner Insurance?

No, but it is similar.

Condo and co-op owners don't need a full homeowner's insurance policy. Sometimes, it's also referred to as apartment insurance.

Condo insurance is, in fact, similar to renters insurance. It insures your valuables and liability for your household members and pets.

It does not cover the building but everything inside of your unit. The condo association or cooperative will have insurance for the property's actual building and common areas.

Your HOA and maintenance fees are paid for the insurance purchased by the association.