Homeowner and Tenant's Insurance
Disasters and other unexpected losses can occur at any time. It is important for homeowners and renters to make sure they understand their insurance options.
It is up to you to purchase the policy that best meets your needs. When shopping for insurance, get references and talk with relatives and friends about their insurance experiences. Examine coverage and costs by comparing the offers of more than one insurance agent or broker.
It is also important to review your existing insurance policies periodically to make sure they provide adequate coverage. While the majority of insurers use fairly standard forms to compile their homeowner policies, there can be differences. Your declaration or "dec" page should be reviewed carefully. It summarizes your coverage, as well as your personal and home information. Information included on the declaration page will look similar to our sample declaration page, and should include:
- Policy number
- Policy period – the period of time the policy covers
- Name and address of the policy owner
- Address of the insured premises
- Name of mortgagee – usually your mortgage company
- Coverage types and policy limits that apply to your policy
- Deductible amount for the policy
- Home-rating information
- Discounts received
- Premium amount
Review all of the the personal information for errors, and check that it reflects the proper coverage levels, as well as any additional riders you may have added.
Basic Coverage and Adding Additional Coverage
The amount of coverage available for certain personal property and other losses is generally related, by percentage, to the amount for which the dwelling is insured. The following shows this relationship for the most widely used policy, usually referred to as the Homeowners Special For.
General Limits on Basic Coverage
The coverage amounts set forth in the chart immediately below, expressed as a percentage of the amount your dwelling is insured for, is the amount you are generally provided by most insurers under a Special Form Policy (discussed above):
% of Limit
Garages, storage sheds, etc.
Personal property on premises
Personal property off premises
Additional living expenses
If you think you need coverage exceeding these percentages you should contact your insurer.
Special Limits on Basic Coverage
In addition to limits on specific categories of property, there are generally further limitations for specific types of property. Here are some examples of typical limitations:
On money, bank notes, bullion, gold & silver
On securities, accounts, deeds, letters of credit, etc.
On watercraft (including trailers)
On trailers not used with watercraft
For loss by theft of jewelry, watches, furs, and precious and semi-precious stones
For loss by theft of silverware, silverplateware, goldware, and pewterware
For loss by theft of guns
On property on the residence premises used or in any manner for any business purpose
On property away from the residence used at any time manner for any business purpose
For loss to electronic apparatus (antennas, tapes, wires, discs, etc.) in or on a motor vehicle
These special limits described in the charts above represent the total amount that a company will typically pay for a loss of property in the specified category. An insured’s overall personal property limit per loss would usually be reduced by any recoveries received that are subject to these special limits.
Therefore, if you have expensive jewelry, furs, cameras, or a coin, stamp, or sports card collection, or valuable antiques, you should consider insuring them separately by endorsement with a higher limit of coverage, or by purchasing a separate policy, called a personal articles "floater."
Homeowner and tenant policies will generally reimburse you for increases in living expenses you have when your company determines that your home is uninhabitable because of damage caused by one of the covered perils. Not all living expenses will be reimbursed; you are only covered for the difference between your normal living expenses and any additional living expenses. Examples of covered expenses are hotel bills, restaurant bills, telephone bills.
Increased Limits of Liability
All homeowners policies typically insure you for your personal liability when another person suffers bodily injury or property damage as a result of your negligence or the negligence of anyone who is an insured under your homeowners policy. Generally, you will also be protected if one of your pets injures someone. However, if you have a dog that is considered a dangerous animal, such as a pit bull, the company may exclude coverage for that pet or offer to provide the coverage for an additional premium. This may also be true for exotic pets, like snakes, spiders, or amphibians.
If an incident occurs at your home and a guest is injured, your insurer will typically reimburse the injured person for necessary medical expenses, generally up to a limit of $500 or $1,000, regardless of whether your negligence caused their injury. Examples of the types of expenses likely paid are transportation to a hospital or doctor’s office, or a doctor’s bill for necessary first aid. You should check your policy for specific details about this coverage.
Typically, medical payments are subject to the personal liability limit attached to a homeowners policy. Personal liability limits of $25,000 per occurrence, including a medical payments limits of $1,000 per person, are typical. Higher limits of liability for these two types of coverage can also be purchased.
There are three types of deductibles under the typical homeowners policy: standard deductible, windstorm deductible and hurricane deductible.
The standard deductible, sometimes called a base-policy deductible, is the amount of loss that must be borne by you before you are eligible for an insurance payment. It generally applies to any loss, except, under certain policies, food spoilage. If your policy contains a standard all-peril deductible, such as $250, you would receive from your insurer the amount of any covered property loss, less $250. The higher the deductible, the lower the premium cost of your policy, because you are essentially “self-ensuring” for losses up to the amount of the deductible.
In choosing your deductible amount, you bear the burden of loss up to the amount you feel you can afford. Contact your insurance company to inquire about higher deductibles options, such as $500 and $1,000.
Some carriers do not impose any additional deductible beyond the base-policy deductible. You should read your policy carefully to determine whether or not you are subject to this deductible.
The windstorm deductible is an optional deductible that applies to any windstorm loss. It commonly ranges from 1% to 5% of either the value of the dwelling or the amount of insurance on the dwelling.
Starting with Hurricane Andrew in 1992, and more recently with Storm Sandy, homeowners’ insurers in New York have seen their exposure to storm damage rise steadily, as shorelines have become more populated and property values have increased. To limit their exposure to catastrophic losses from natural disasters, insurers sell homeowners insurance policies with deductibles for wind damage as a way of having property owners bear some of the risk of catastrophic storms, without raising overall premiums to unaffordable levels.
Regulation 159 outlines specific information that insurers must disclose to insurance consumers. Information required to be disclosed includes all deductibles attached to consumers’ policies.
A hurricane deductible is usually a company mandated deductible that applies when a storm is declared a hurricane. It is commonly 1% to 5% of either the value of the dwelling or the amount of insurance on the dwelling.
Consumers in areas located near shore or waterfront areas may, depending upon geographical location and degree of risk, be subject to hurricane deductibles. Many insurers require them for properties located in the five boroughs of New York City, Nassau and Suffolk counties, and coastal areas of Westchester County.
The Department requires that insurers express this deductible as a dollar amount on the declarations page of any policy to which it is attached. For instance, if your home is insured for $150,000 and a mandatory 5% hurricane deductible is applied to your policy, you would be responsible for the first $7,500 of any loss as the result of a hurricane. If a hurricane causes $10,000 worth of property damage to your home you are responsible for the first $7,500 and the insurer is responsible for the remaining $2,500.
The event which triggers the application of these deductibles varies among insurers. Example of triggers include:
- a Category 1 hurricane (designated by the national weather service or the national hurricane center)
- a Category 2 hurricane
- specific mile-per-hour winds
Yet other carriers apply a windstorm deductible (a flat or varying amount depending upon wind strength) to any windstorm loss.
A Summary of all Windstorm Deductibles approved by the Department is available.
Insurance coverage for losses resulting from floods or mudslides is not provided in standard homeowners or unit policies. This coverage is available under a separate policy issued through the National Flood Insurance Program (NFIP). The majority of New York State towns, villages and cities are participants in the NFIP.
Insurers are required to provide annual policyholder notice of the NFIP.
Learn more about Problems Obtaining Coverage.
Earthquakes are not covered under standard homeowners, renters or condominium policies. Coverage is available from certain property insurers under either a separate policy or as an endorsement to an existing policy. Property insurers are not required to offer this coverage.
Earthquake insurance rates are determined differently by each insurance company and vary by several rating factors, including age of home (older homes cost more to insure), construction type (wood frame structures usually get lower rates than brick structure due to their ability to endure quake stress), and location of the home. Since this is a type of catastrophic coverage, policies usually have a high deductible as a percentage of the replacement value of the insured structure which can range from 10%-25%. Additional information about earthquake risks can be found on the websites of the Federal Emergency Management Agency at www.fema.gov, and the U.S. Geological Survey (USGS) at www.usgs.gov.
Water Backup Endorsement
Some homeowners insurance companies offer an endorsement that provides coverage for sewer backups, including sump pump failure. For an additional premium, you can eliminate this exclusion from your policy up to the dollar limit you select. The wording of the endorsement will vary between insurers, but generally it will apply to several types of water backup including municipal sewer lines, toilets and sump pumps.
If this coverage is a concern for you, make sure to ask if it is available, and to include it on your policy. However, homeowners insurance excludes losses caused by flooding, which is generally defined to mean water coming in above the foundation. A sewer or sump pump failure causing water backup comes from lines below the foundation. Even if you have a flood insurance policy, it is not likely to cover a sump pump failure caused by a flood: neither the flood or homeowners policy alone is likely to cover this damage.
Personal Excess and Umbrella Policies
For additional liability coverage above the amounts provided in the homeowners or renters policy, you may consider purchasing a personal excess policy. A personal excess policy protects you from judgments in lawsuits that exceed the protection of your primary (homeowners, tenants, cooperative or condominium) policy. The personal excess policy provides coverage similar to that provided by your primary policy, but the amount of liability insurance provided is higher than the limit in your primary policy.
Similarly, if you have an automobile policy in addition to a homeowners or renters policy, and have sufficient assets you would like to protect, you may consider purchasing a personal umbrella policy. An umbrella policy protects you by providing additional liability coverage against judgments in lawsuits that exceed the protection of your primary automobile, homeowners or renters policies, with higher limits of liability insurance, typically of $1 million or more.
In addition to coverage for bodily injury and property damage liability, umbrella policies usually cover additional offenses, such as libel, slander, false arrest, and invasion of privacy. In order to be eligible for an umbrella policy, insurance companies may require you to purchase and maintain certain minimum underlying liability limits on your primary policies.
Home Computer Coverage
Normally, home computers used for personal use are subject to the limit available for personal property; some companies may have a separate limit for a home computer. However, if the computer is used for business, coverage would be subject to the limit for business property ($2,500) shown above. If you need higher limits for a business computer, contact your company, agent or broker to determine if higher limits are available through the purchase of an additional endorsement or a separate policy.
If you do not purchase higher limits and use a laptop computer for business purposes you should be aware that if it is lost or stolen, the location of the loss determines the coverage available. In the example above, if the loss occurs at home, the coverage limit is $2,500; if the loss occurs away from home it is only covered for $500.
Workers’ Compensation Insurance
The Insurance Law requires that any policy that provides personal injury liability and is issued for a one-to-four family, owner occupied dwelling, also provide workers’ compensation insurance. This insurance would apply to any employee working less than 40 hours per week pursuant to the New York State Workers’ Compensation Law. However, certain classes of employees are exempt from coverage under the New York State Workers’ Compensation Law. Whenever you hire someone to work for you, you should check with your agent or broker to determine whether those employees would be covered under your policy.
Home Day Care Coverage
There is limited liability coverage under your homeowners policy for certain day care activities. Ordinarily, coverage is provided if you take care of one or two children for a mutual exchange of services. This means that if you take care of a friend’s children in exchange for their day care services for your children, with no exchange of money, liability coverage will be provided under your policy.
If you provide day care services and are compensated for this work, you are considered to be engaged in a business enterprise and you must purchase additional coverage. Some companies will provide day care coverage in a homeowners policy for up to six children, with a separate premium charge per child equal to the personal liability limit that is already provided under your policy. Premium charges vary from company to company so you must contact your insurance representative for more details concerning this coverage.
Your insurance agent, broker or licensed sales representative will be able to discuss your insurance needs and provide help on the appropriate amount of coverage.
A self-storage facility that charges you a rental fee for the items you store may act as an agent for a licensed insurer and offer to sell you insurance. Before you purchase this optional insurance, check your homeowners policy to see if it already provides sufficient coverage.