Feeling the pinch in the Big Apple? Here’s why the five boroughs face steeper insurance premiums.
Key takeaways:
- The high insurance rates NYC suffers are due to various factors, including traffic volume, real estate appreciation, higher crime, and litigation exposure.
- Weather and climate risk also influence the cost of insurance in New York City.
- Some best practices, like comparison shopping, bundling, and credit score management, can combat steeper rates.
The high cost of insurance in New York City is no accident. With a population of 8.4 million packed into just over 300 square miles, the risk of accidents, theft, and other claims is naturally higher than in less densely populated areas.
But it’s not just the streets that drive up rates. Factors from above and below, including severe weather risks and coastal flooding, also play a role.
That’s why, in this article, we’ll break down the key reasons why insurance rates in NYC outpace the rest of the state and offer practical strategies you can use to help make coverage more affordable.
What’s Driving NYC’s Elevated Premiums?
You can blame the auto insurance rates NYC sets on the sheer volume of vehicles crowding its streets. The city’s municipal fleet alone exceeds 30,000, with residents adding two million vehicles of their own.
This creates denser traffic and, as a result, a greater risk of insurance-sensitive factors like accidents, litigation, and theft. Whether these things actually happen more frequently or are merely more likely to happen doesn’t ultimately matter: Insurers raise rates to some degree either way.
NYC has an estimated 3.7 million housing units. Again, the higher the base number, the greater the chances of rate-raising events like break-ins, interior damage, or exterior harm, and the higher the cost of home insurance in New York City.
And the home insurance rates NYC experiences are further driven up by higher real estate values, particularly in areas with denser populations and a higher cost of living, like Manhattan. The opposite is also true, with cheaper areas often facing higher crime rates, which can increase premiums.
Comparing Auto and Home Insurance in NYC vs. Other NY Regions
The Zebra positions NYC as America’s second most expensive city for auto insurance at an average of over $4,700 annually.
This figure differs from Bankrate’s data, which says Brooklyn isn’t just the most expensive for car insurance in the Big Apple at $6,728…it’s the most expensive in the country.
Compare this to the $3,378 Buffalo residents pay on average for auto coverage, or the $1,705.32 annual average in Albany. The cost of home insurance in New York City is also on the higher side.
The average cost of homeowners’ insurance in New York State, based on $200k in coverage, is $1,340; lower than the insurance rates NYC pays at $1,986.
Unfortunately, the Big Apple’s unenviable insurance profile doesn’t end there!
More Regional Risk Elements That Inflate Rates
Sometimes, higher rates simply come down to the environment you’re in. In New York City, elevated levels of fraud and frequent lawsuits add yet another layer of cost to the auto insurance premiums residents face.
NYC is also in a No-Fault driving state (here’s what that really means). This increases car insurance costs, since New Yorkers must carry Personal Injury Protection (PIP).
Under this coverage, the insurance company pays out regardless of responsibility, meaning that even safe drivers can pay a high price following an accident.
This directly ties into health costs in NYC, where spending exceeds the national average. Higher medical costs naturally mean higher health insurance rates NYC residents must meet, but also costlier vehicle insurance, since paying auto-related health bills will be more expensive.
How Weather Impacts NYC
NYC’s increasingly harmful weather is making inland flood risks, like snowmelt and heavy rainfall, more regular occurrences, with the same applying to the many kinds of property and personal damages caused by storms, hurricanes, and coastal surges.
Protecting against environmental hazards isn’t cheap for policyholders. It’s also been hugely expensive for insurers to settle the rising number of weather-related claims in recent years. This is yet another contributor to the overall cost of insurance that New York City is accepting.
Some New Yorkers are opting to add flood insurance to their coverage plans. It’s a smart precaution in the face of climate change’s impact on homeowners’ insurance, but one that nonetheless increases the insurance rates NYC pays.
NYC must also contend with harsh winters that cause accident and damage claims to increase. More insurance payouts are common at this time to cover vehicle and home repairs, medical claims, or litigation, which can further elevate auto premiums all around.
Strategies to Make Premiums More Manageable
With all this being said, you don’t have to let the cost of insurance in New York City get you down. There are ways to potentially make your insurance premiums more manageable, no matter what type of coverage you have.
Consider these practical strategies:
- Comparing multiple quotes from different insurers alongside your current provider.
- Bundling different policy types together under the same insurer which can lead to significant discounts.
- Checking your current deductible to see if you can afford to increase it. This will raise your out-of-pocket expenses, but lower your premiums.
- Driving safely at all times, and especially during adverse weather.
- Speaking to your auto insurer about pay-per-mile and usage-based coverage options.
- Improving your credit score.
The insurance rates NYC pays could also be reduced by safeguarding homes and possessions against human and environmental risks, and living the healthiest possible lifestyle, making it a less expensive prospect for both health and life insurers.
While it’s true these steps won’t completely eliminate the high insurance rates NYC residents must deal with, they can do a lot to mitigate them.
How NICRIS Empowers NYC Residents
We closely monitor New York’s insurance landscape to help you make the cost of insurance in New York City as manageable as possible.
Our free, one-hour policy review, coupled with our risk assessment, is a quick and easy way to examine your current policies and find the most cost-effective insurance for your home, vehicle, and life.
Contact us today to learn more about coverage optimization and receive tailored recommendations to reduce risk and stay protected!