Everything you need to know about renter's insurance
According to police estimates, at least half of New York City renters don’t have renter's insurance. If that includes you, maybe you're betting that nothing’s going to happen. Or you think that if there's a flood or a fire, the building will reimburse you for your flat screen television and designer shoe collection.
Um, not so much. Your building won't fork over a dime for your lost property.
“Denial is not a good thing when it comes to insurance,” says Rick Bingham, a manager at the Manhattan insurance brokerage Kornreich-NIA, Inc.
Agents recommend at least a basic policy to cover what you own – unless, of course, you think it would be no problem to replace it all in case of a disaster. And even if you think your possessions are not that valuable, all those clothes, furniture, electronics, and other personal items can really add up.
“People typically undervalue their possessions,” Bingham says. “But if the whole building goes up in flames, you need to think of things in terms of replacement costs.”
Additionally, if a guest or your housekeeper or babysitter is injured in your apartment, you’re technically liable. Of course, you hope he/she won’t sue, but if you wind up in court, renter's insurance covers that, too. And it’s relatively inexpensive, with basic plans covering $20,000-$35,000 worth of property starting at only $125 per year.
Here are some tips to make sure you’re covered:
The right coverage
- Many rental buildings in the city require residents to at least have liability insurance, which also covers your negligence if you inadvertently leave a candle burning next to a stack of newspapers. If fire or flood affects other renters, the policy will cover the damages. Some buildings require insurance for $1-2 million in liability, but a basic plan will cover $100,000 worth of damage. Bingham recommends a plan that meets or exceeds your net worth. “If someone sues, they could sue you for everything.”
- When it comes to your personal property, overestimate. Think of your possessions in terms of what they would cost to replace, not what you think they’d be worth at a yard sale. “Even if your TV is five years old, you need to think of what it would cost to buy that TV now,” Bingham says. “It’s best to overestimate what you have.”
- As a benchmark, Bingham recommends $100,000 of insurance for a 1,000-square-foot apartment. Of course, if you have a lot of high-value items, you should take that into consideration. He recommends Chubb as the “crème-de-la-crème” of insurance carriers.
- Choose a “replacement cost” plan as opposed to a “cash value” plan. The latter might save a few dollars a year, but doesn’t take into account the depreciation of your property. “What was $2,000 ten years ago might be worth $150 now and cost $8,000 to replace,” says Steve Bernstein, a State Farm broker.
- High-ticket items – like fine art or diamond jewelry – need to be insured separately. “Policies have a maximum coverage limit for the combined value of all of your jewelry, and this limit might be only a fraction of the value of your items,” according to the National Association of Insurance Commissioners. Have high-ticket items appraised by an independent appraiser, and be sure to see if you qualify for discounts if you have a home safe or store the items in a safety deposit box.
- If your apartment is damaged to the point you can’t stay there, insurance should pick up the tab for alternative housing. “That’s called ‘loss of use,’ and your policy should cover the cost.”
Record keeping
- Insurance agents recommend carefully documenting all your possessions by taking inventory, complete with photographs you can refer back to. Be sure to store the photos digitally or off-site. Or, try the NAIC’s free iPhone app, My Home Scr.AAP.Book, designed to help people take inventory and keep it stored securely. “Our research suggests almost half of all Americans don’t have an inventory of their possessions,” says Susan E. Voss, president of the NAIC. “Our new iPhone app makes it easy to document your stuff.” And, she adds, “knowing what you own will help you choose the right coverage in the first place.”
- Most people don’t have records of all their items, however. All hope is not lost: Smaller fires or floods will damage goods, but not destroy them. In that case, an adjuster will come to your apartment and help you determine the worth of what you’ve lost, says Bernstein. “In these cases, it’s fairly easy to determine what was in the apartment,” he says.
Insider tips and one huge exclusion
- With most renters insurance policies, “off premises theft” is also covered. So if your laptop is stolen from a local coffee shop, the policy should cover it. On the other hand, if you lose it or drop it, you’re out of luck, says Bernstein. Unless, of course, you have a separate policy for that item.
- These policies will also cover items in storage bins in your building’s basement or your bike if it's stored in the bike room.
- Also, when you’re moving and your stuff is in transit, it’s covered if the truck flips over and catches fire or if it’s stolen. But if the movers are negligent and break your grandmother’s china, that’s not covered, he says.
- A family can be on one policy, but roommates cannot. “Each roommate should have their own, otherwise it gets very sticky,” Bernstein says.
- If you happen to have an Airbnb guest or subletter staying at your apartment, he or she is not covered by your insurance, says Jeff Schneider of Gotham Brokerage. "The short term rental will void any coverage you may have. So if the ‘guest’ damages the apartment or steals from you or is injured slipping in the bathroom, there is no coverage," he says.
- Some insurance companies allow customers to bundle their car, life, renters, and other insurances into one discounted bill. This saves time and as much as 15% on the total bill. Discounts may also be available through your alma mater or other groups where you’re a member.
When looking to buy renters insurance, you can get a quote and buy online directly from an insurer or you can go through a broker.
"For apartment insurance, the differences in price among the different sales options are not great," says Schneider. "A broker or agent may have more experience or more options for a given consumer or may offer a 'one call' option for different insurance policies," including home, auto, life, and other policies.
However, he adds, "these are pretty standard contracts…it really comes down to consumer preference, ease of doing business and finding someone who offers good advice and service.”
According to the NAIC, some of New York's most popular carriers according include:
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