Homeowners Insurance in New York
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UPDATED: Mar 13, 2020
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Purchasing homeowners insurance is important no matter where you are - but in the state of New York, it's especially important. If you're one of the 8 million people living in New York City, there are dozens of reasons why it's important to have insurance protection on your home. Even if you're nestled away on a farm upstate, inclement weather can still ravage your property. No matter where you live in the state, you don't want to be left fooding the bill if the worst happens.
Homeowners insurance is fairly well standardized throughout the country, with the HO-3 "special form" policy being by far the most popular policy that homeowners purchase. It provides very comprehensive coverage and protects against may of the perils that New York residents face, from hurricanes to winter storms to theft, and more.
|Types of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$300,000|
|Replacement Cost (Contents)||$150,000|
The estimates above are based on an example provided by the Department of Financial Services. As you can see, liability coverage limits are higher within the state of New York and, depending on how much value your personal property has (based on an accurate home inventory), you may be able to take out more than 50% of your home's worth in coverage on it.
New York is a much larger state than most people realize. As much as New York City is a buzzing metropolis and hub for international culture and finance, rural farmland can be found about an hour away from downtown Manhattan. These variations in population density and economic activity account for the wild fluctuations in New York homeowners insurance rates. And it isn't just city to city - in New York City proper, it's borough to borough. .
The variations don't stop there. You'll get dramatically different estimates from company to company, too. This is why it's so important to shop around and receive multiple quotes from different insurers. You could end up saving hundreds - if not thousands or more - of dollars over the life of your home by comparison shopping.
Laws and Requirements
While there's no government law that says you have to purchase coverage, your bank may make it a mandatory condition of your mortgage. And that makes sense, since they have an interest in protecting that property which, until your mortgage is paid in full, still technically belongs to them. But even if you have paid your loan or purchased your home in cash, you should still think about protecting it with homeowners insurance. There are dozens of perils which can befall New York residents at any time - and not having protection against them could be financially devastating.
Taking a Home Inventory
The contents of your home are just as important as the external structure. And you'll need to purchase an adequate amount of coverage in order to protect them. But how much coverage will you need to purchase? That all depends on your home inventory. It may be a tedious process, but making sure you have a thorough and accurate home inventory will help you buy the best coverage without overpaying for excess limits on your policy.
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Choosing What (and How Much) Coverage
Most New York homeowners insurance policies will incorporate Dwelling and Personal Property Coverage, Liability Coverage, Medical Payments Coverage, and Additional Living Expenses Coverage into a standard policy. You may also need coverage for:
- Fires - Members of the FDNY have one of the toughest, most demanding jobs in the world: keeping New York City safe from the plethora of fires that spark up in the densely populated metropolis each and every day. Likewise, upstate New Yorkers have their fair share of worries from wildfires. Thankfully for homeowners, standard HO-3 policies have ample protection for fire-related damage.
- Theft - This may not be a big problem in most cities across the state, but for homeowners in the five boroughs, theft is a common occurrence. HO-3 policies include theft under the named perils section of their property coverage, so you won't have to worry about replacing all of your stolen goods on your own.
- Wind - Wind damage, especially in recent years, is a growing concern. Hurricane Sandy especially did massive amounts of damage to coastal homes and property. Homeowners insurance companies are now enforcing a mandatory deductible on hurricane-related damages (except for flood damage). This deductible can range from 3-10% of your home's total value, depending on what you and your insurance company agree on.
- Flood Damage - For years, insurance companies have been reluctant to sell any sort of flood coverage to their customers. Floods are becoming more and more common - and also more and more expensive to recover from. But the National Flood Insurance Program will sell most homeowners up to $250,000 of coverage, and it's sponsored by FEMA.
- Covering Your Property - Most special form policies will sell you coverage limits on personal property for at least 50% of your home's total value. But as you can see in one of our previous examples, you may have the option to purchase more. Be sure to talk to your insurance agent about your options after completing your home inventory.
- Liability Coverage - It may be unthinkable, but accidents can happen on your property at any time. And if they're serious enough to call in the lawyers, then you're going to need liability insurance coverage. New York homeowners insurance policies provide that - in ample amounts - so that you don't have to worry about paying damages if you are found culpable.
- Umbrella Coverage - A simple insurance policy like the one we discussed earlier might not be enough to cover a multi-million dollar penthouse condo in the heart of Manhattan. For coverage limits beyond what a typical private insurance company might be willing to sell, you should ask about umbrella coverage.
Replacement Cost vs. Actual Cash Value
As a rule of thumb, honored claims on structural damages usually get paid out at replacement cost. This means your provider will pay 100% of whatever it costs to repair your home, now, to prevent further damage and help you move on with your life. Personal property, on the other hand, usually receives less than 100% of its replacement value due to depreciation (AKA "actual cash value"). But you can talk to your insurance provider about riders which can apply replacement cost coverage to some or all of your personal property.
How Your Credit Score May Influence Your Rate
In most states, homeowners insurance companies check your credit a little bit differently than, say, your mortgage lender or the bank managing your auto loan would. Their evaluation of your credit history involves making a "soft" check that doesn't leave any negative marks on your overall FICO score, unlike "hard" checks do. These soft checks also limit their examination to your most recent history, usually less than 10 years out, and don't bother with things like unpaid medical bills.
In New York, however, you'll have to check with the insurance companies you want to get quotes from before you let them check your credit. There's a chance they might want your entire FICO score, which means running a hard check on your credit. Too many hard checks mean a lowering of your overall score, and can hurt your chances at receiving affordable premiums in the future.
For more information, feel free to click any of the links you see in this article. They all lead to more detailed information about homeowner's insurance, specifics on purchasing a policy, and how to find the best deal. You should also contact local resources in your state, such as:
Or contact them directly through the following resources:
New York City - Main Office
New York State Department of Financial Services
One State Street
New York, NY 10004-1511
Email the Superintendent