You might be thinking, do I really need to spend an extra $20 a month on something that I’ll never use? — until you do. Here is everything you need to know about renters insurance in New York City.
What is Renters Insurance Anyway?
You’re already spending $1800 on a closet in New York, so what’s another couple dollars to make sure all the stuff you can’t fit will survive in case your pyromaniac roommate leaves the stove on, or your roommate’s jazz fusion dancer friend kicks your TV off the wall.
This is what renters insurance is for. You’re paying a small amount each month to make sure that in case of an accident in your home, your stuff is covered by a company that specializes in peace of mind. The hope is that you can keep your possessions intact throughout the lease, but just in case, it’s good to have renters’ insurance.
Here’s some extra information, so insurance agents won’t confuse you:
- Sometimes renters insurance policy is called an “HO-4” policy. Impress people with that knowledge.
- Renters’ insurance is pretty versatile, but it doesn’t take the place of auto insurance, even if you’re technically “renting” the car. In this case “HO-4” only refers to renting a home.
What Could Happen if You Don’t Get Renters Insurance?
Your NYC apartment is likely old (like most apartments in The City), and no matter how good your landlord is, a pipe could burst and you will come home from work to find out everything is soaked through. Some items, like your clothes might be salvageable (yay towels!), but other items (looking at you $1000 Martin guitar), are completely destroyed.
You might think: the landlord is responsible for the building, so the landlord is also responsible for things that happen inside the building. You would be half-right: the landlord must make sure the pipes in your apartment are in working order, but your $900 Smart TV? That’s on you. The landlord has no way of knowing what you own and legally isn’t responsible for it anyway.
What if a guest falls in your apartment, and it’s your fault because you forgot to mop it for three weeks?
Without renters insurance, you’ll have to pay to replace everything out of pocket or even worst, pay for someone else’s medical expenses. Good luck eating instant ramen and potatoes for the next few months.
What Does Renters Insurance Cover?
Okay: you’re 250 words into this blog post and now you’re a pro. You’ve got an apartment, you know what the word insurance is, and you know that you’re responsible for your stuff. You’re logical: you now know that if you will pay the equivalent price of 4 New York City lattes a month, everything you own will be covered in case of an accident in the apartment. Unfortunately, you’re wrong.
Here’s what’s covered by your monthly renters insurance premium:
- Liability: Someone gets hurt in your rented apartment, this insurance can cover any money you’ll be responsible for paying that person. OR: the bathtub that leaked onto someone else’s expensive TV, in another apartment. This insurance will cover that.
- Personal property: In general, renters insurance covers 16 different types of damages. Here’s a list from the online insurance marketplace, The Zebra:
- Civil unrest
- Vandalism or malicious mischief
- Volcanic eruption
- Falling objects
- Weight of snow, ice, or sleet
- Accidental discharge or overflow of water or steam from an appliance, or a plumbing, heating, or air conditioning systems
- Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water system, an air conditioning, or automatic fire-protection system
- Short-circuit damage caused by electrical appliances
Temporary living expenses: That cool explosion in your apartment? Yea, you can’t live there right now. You’ll have to find another apartment to rent. Insurance will cover part or all of this cost for a period of time.
Medical expenses: Your friend get a little too playful with your dog? Your mom trip over your pillow fort? Renters insurance can help cover medical expenses related to an injury that happens in your apartment.
What Doesn’t Renters Insurance Cover?
Here’s what’s NOT covered by your renters insurance premium:
- Earthquakes: New York City isn’t particularly prone to devastating earthquakes, but there are a bunch of faults that run below our buildings. You know what they say about being too prepared? You can likely buy extra renters insurance or additional coverage for damage to your stuff caused by an earthquake.
- Floods: This is super complicated, as accidental water damage is covered but an overflowing toilet that you clogged is not. Sound confusing? It is.
If you’re worried about flood damage in your rental apartment, you should purchase additional flood insurance. Example: Your roommate fell asleep in the tub, left the water running. Sounds familiar? Get a new roommate, or find a new apartment.
How do I Choose the Right Amount of Renters Insurance?
1. Inventory your stuff.
You don’t know what’s in the back of your closet? Time to dig it all out.
You’ll usually be asked to provide an estimate of how much your stuff is worth. You have no idea how much your vintage (read: never washed) John Lennon t-shirt is worth? You DO know however that you just spent $8,000 on a new MacBook, and that bike is worth $600, etc. Literally walk around your house and count things that you’d want to replace in case of a ninja attack on your apartment.
2. Choose the “right amount” of insurance
Some insurance companies limit the payout on certain classes of items: Basic coverage won’t pay out near the full amount on your de Kooning. It’s best to get specific coverage on high-ticket items, assuming you own any, you NYC apartment hopper.
There’s of course two types of payouts:
Actual Cash Value (ACV) vs. Replacement Cost Value (RCV).
ACV takes into account the value of your stuff today. What does that mean? Remember that John Lennon t-shirt? It’s likely worth close to $0. That 8-year-old “Smart” TV? Definitely less than what you paid for it. That’s the payout an insurance adjuster is going to recommend.
RCV takes into account what it costs to replace a similarly-valued object. You won’t get bonus points for “vintage,” but you will get the option of buying a new John Lennon t-shirt at what it costs today. Your Smart TV? You might be looking at something at the same price range of what your TV cost 8 years ago (even if the tech is better).
ACV premiums are generally cheaper, but not much. It’s up to you how much you need that new stuff after a rental apartment snafu.
How Much is it Going to Cost me, and How to Find the Best Renters Insurance?
Good news! Renters insurance is pretty cheap. For most-of-the-above, it’ll cost you less than $20 a month with a relatively small deductible (or how much you have to pay out-of-pocket before your insurance kicks in).
Insurance companies, established ones you’ve heard of like Geico and Nationwide, and new ones you haven’t like Lemonade and Hippo, have different levels of coverage and you’ll pay depending on how much you own on average. If you’re trying to keep costs to a minimum, maybe don’t spend $8,000 on a MacBook.
Rapid Fire FAQs to Help Answer Your Remaining Questions.
Can your landlord require you to carry renters insurance?
Yes, but it’s not legally required for you to rent an apartment in NYC.
Can I bundle my insurances?
If you carry other types of insurance – home, car, life, your current company may offer deals for you to add an additional renters policy for less money than a standalone policy.
Does my renters insurance cover my kids’ college apartment?
Depends. If you have a homeowners or renters policy, your coverage might extend to your kid if they live in an on-campus dorm owned by a college or university. If they live off campus – likely not.
Are bed bugs covered?
Nope, not usually. Check with your insurance agent to be extra sure.
Does renters insurance travel with you or with the property?
Likely you can bring your insurance with you to your new apartment, but you should always inform your insurance company of any changes that might affect the policy. This is especially true if you’re moving across city or state lines.
Is my stuff covered while I’m moving?
It depends on how you choose to move. If you’re using a moving company, they’re required to offer you the ability to purchase insurance for the duration of the move. Always check with your policy holder in any case.
Don’t let renters insurance scare you or fool you. Whether it’s your first or fiftieth NYC apartment, it’s always good to carry a little peace of mind in your pocket. It’s also always good to check policies company by company, and location by location so you can get the right coverage for your needs.