You probably spent a lot of time looking and saving for that NYC apartment. But before you can start choosing paint schemes and moving in, you’ll need to get your insurance sorted for your co-op or condo apartment. A big mistake many first-time condo or co-op buyers make is thinking that the buildings own insurance, the master policy will cover their apartment.
However, it doesn’t. The master policy will cover the walls and common areas, but anything inside the unit is your responsibility. If you want to save yourself time, money, and regret then it’s important to know what questions to ask when shopping for apartment insurance. A home purchase is perhaps the most significant investment you’ll ever make so naturally you’ll want that investment protected with good coverage.
Table of Contents
- What exactly will the insurance cover?
- How much will your co-op and condo insurance cost?
- What doesn’t your insurance cover?
- If something happens to your apartment will your insurer cover the costs of temporary housing?
- Are there any special insurance requirements in your building? What about your lender?
- How big should your deductible be?
- Are you still covered if you sublet or only live there part-time?
What exactly will the insurance cover?
There are three basic types of coverage included in co-op and condo insurance: contents, walls and floors, and personal liability.
This will cover the majority of your personal property. For instance, electronics, clothing, and furniture from the dangers of fire, theft, and water damage. How well they are covered depends on how much you pay to insure them. This is entirely up to you. The only things with a limitation on how much you can insure them are jewelry, silverware, and fur. These will require extra coverage if you want them insured in full. Also, if you work from home, then you might want to get extra coverage on business equipment as this may not be covered with the basic package.
Walls and Floors
This covers the walls and floors of your unit, plus any renovations you’ve done such as the bathroom or kitchen. On average, it costs about $250 per square foot to rebuild a typical NYC apartment. However, for a more high-end apartment or one that’s in a pre-war building, the cost can be as much as $700 per square foot. Since the risk of a total loss is negligible, most people don’t insure for the full amount. Instead, they strike a balance between what they can reasonably afford and a level of coverage that won’t cause financial ruin in the event of a major disaster.
This covers any bodily injury incurred by guests/visitors while in your home. This will also include any damage to your neighbor’s apartment such as water damage from an overflowing bathtub. This is the most common claim, so you’ll want to make sure you have this.
How much will your co-op and condo insurance cost?
The most basic policy will cost between $300 and $400 per year. This will get you about $25,000 for your contents, $20,000 for the floors and walls, and $100,000 for personal liability. This isn’t a lot, and for a substantial claim you’ll end up having to pay out of your pocket. More extensive coverage will cost between $450 and $650 a year which will cover $50,000 for contents and walls and floors and $500,000 for personal liability. The most extensive coverage will cost between $1,100 and $2,400 and provide $100,000 for contents coverage, $300,000 for walls and floors, and $1 million for personal liability.
What doesn’t your insurance cover?
Typically speaking, condo or co-op insurance will not cover any of the following:
- Damage or loss of use of the apartment due to rising flow waters
- Dog bites from dangerous breeds (i.e., Pitbull’s)
- Vermin or insect damage
- Wear and tear
- Short term renters of less than 3-6 months
If something happens to your apartment will your insurer cover the costs of temporary housing?
Your apartment and contents may be covered safely but what about the costs of temporary housing in the event that anything should happen? No matter the plan, every policy will have some “loss of use” coverage. However, some policies will have time limits while others will only provide a percentage of your contents insurance. Be sure to ask about this and check the fine print.
Are there any special insurance requirements in your building? What about your lender?
Prior to buying any insurance, you’ll want to first check with your building and mortgage lender for any special requirements. For instance, water damage is the most common claim made in NYC housing. Both condo and co-op boards will want to see that you have enough liability coverage to deal with them. This is important as they don’t want to have the buildings master insurance invoked or get involved in the claim process in any way. In addition, they’ll also require you to have enough coverage to rebuild quickly in the event of a significant loss.
How big should your deductible be?
Your deductibles, the amount you pay on a claim before being reimbursed, can go from $250 to $2,500. In extreme cases, it can be up to $25,000. On the first few increases, you’ll save about 10% on your premium. After that, you’ll start to get diminishing returns. It’s best to get the highest deductible you can afford. This will discourage you from making small claims. Making two or more claims in three years can make it difficult to renew your insurance and can land you on an industry blacklist. If that happens, then you’ll need to pay for more expensive coverage on the secondary market and wait several years without making a claim.
Are you still covered if you sublet or only live there part-time?
If you plan to rent out your apartment on at least a six-month basis, then your insurance can be modified to cover you. Just make sure you inform your insurance broker of this. Anything less than that and you won’t be covered. If you stay in the apartment, but only part-time, then your insurance will still cover you. However, the apartment must stay furnished. Check the wording in your policy to see how this applies.