Understanding property insurance and what to look for when shopping for homeowners insurance in New York

Whether you’re an existing homeowner or in the market for a new home, it is important to understand the value of a home insurance policy. Owning a home is a significant investment and a valuable asset, so you’ll want to be sure you’re protected in the event of a natural disaster, accident, or other potential risks.

A standard policy will protect the structure of your home and many policies also include coverage for other structures on your property, personal belongings, and people. The costs and requirements for home insurance policies can be highly variable based on the state and the insurer.

The Insurance Information Institute reports that in New York, the average annual cost of homeowners insurance is $1,256, 16% higher than the national average of $1083. The age and construction of the home, the neighborhood rating, and the risk of natural disasters are all factors that play into the cost of a home insurance policy.

A true understanding of how much your home will cost to insure involves a thorough evaluation of its structure and contents. This process means evaluating the condition of the structure of your home, factoring in square footage, as well as taking an inventory of your possessions. Let’s take a closer look at the nature of home insurance in New York and consider the factors that go into shaping a worthwhile policy.

Examining the standard policy

While policies vary in cost and coverage, understanding what kind of coverage is included in a standard policy can help you evaluate the needs of your own home.

Under the minimum (or “standard”) policy, a homeowner can expect to be covered in these four areas:

  • Damage to the structure of the home
  • Damage to personal belongings
  • Liability protection (including damage to other people’s property, personal liability, and medical expenses)
  • Reimbursement for unexpected living expenses

Structural coverage is the most important aspect of your home insurance policy. When possible, it is recommended to insure your home for the full amount of what it would cost to rebuild in the event of total destruction.

Coverage for damage or loss of personal belongings is also included in standard home insurance policies. The coverage limit is usually determined by calculating 50% of the value of the structure of your home.

According to The New York Times, most homeowners insurance policies in New York offer a minimum of about $100,000 of liability protection, though it may be recommended to increase liability protection depending on the value of your assets. Liability protection covers damage caused to another’s property, personal liability in the event of a lawsuit resulting from the injury of another person or property, as well as medical expenses related to incidents that occurred on your property.

In the event of the destruction or extensive damage to your home, a standard insurance policy will typically provide some coverage to cover additional living expenses incurred as a result of having to relocate. For many policies, the coverage is usually equal to about 20% of the total coverage on your property.

Why a standard coverage policy may not be sufficient?

Surprise expenses

A standard insurance policy offers the basic coverage needed for your home, however, it is important to consider specific factors that pertain to your individual circumstances. If you live in a flood zone, for example, you’ll need to purchase a separate flood insurance policy, as flood damage is not covered by a standard insurance policy.

The cost of additional living expenses is a valuable feature that will pay for a hotel or other accommodation should you ever have to leave your home in the event of a covered loss as it undergoes repairs. While it is included in most standard insurance policies, exactly how these individual clauses will pay out is dependent on the sum of your overall policy. Since most New York home insurance claims are driven by harsh weather and its effects, leaving your home as it is repaired could well occur – and you’ll want to know that you’re covered.

Actual value vs. perceived value

When determining what type of policy is best for you, it is important to factor in the value of your personal property and assets. Certain items such as computers, silverware, jewelry, guns, money, securities, and others listed have monetary limitations on the value you can claim. Loss of cash money is covered least, while the loss of firearms and business items receive the highest protection.

These average coverage figures may be enough for some, but it’s hard to place a cash number on something of deep worth to you. An insurer decides how much they think it’s worth for a claim. This figure may not approach the sentimental value you place on it.

Whether it’s a family photo album or a diamond necklace, you should consider scheduling your personal property – which takes care of that item specifically and doesn’t group it with everything else under a standard policy.

Flood insurance and weather hazards

As previously mentioned, protecting yourself against flood damage will require an additional policy outside of your standard home insurance policy. The New York Department of Finances reports that you may purchase a flood insurance policy that covers of up to $250,000 in damages. This figure provides coverage against structural damage such as floors, air conditioners, water heaters, furnaces and cost of debris removal, but does not cover damage to personal belongings. For an additional premium, you can purchase up to $100,000 of flood coverage for your personal property.

For New Yorkers, FEMA reports that overall flood insurance claim averages at $700 per year, assuming their region is covered under the National Flood Insurance Program.

Neighborhoods at risk

The risk of theft or vandalism is another factor to consider when assessing your property’s risk of incurring loss or damage. If your insurer considers you to be in a high-risk area, your monthly premiums can also be higher relative to other areas.

The good news is that New York is seeing record drops in the crime rate. If you’re still in a higher-risk neighborhood, New York home insurance can be lowered if homeowners safeguard against man-made or natural damage. The installation of burglar and fire alarms, storm doors/shutters, advanced locks and home security systems add an extra layer of protection. This, in turn, can make you less of a risk and also reduce monthly premiums.

Ultimately, it’s always best to discuss your individual home’s circumstances with a qualified and caring insurer. The average policy provider may only be concerned with protecting the structure from damage and for them, the minimum is usually good enough.

Weigh up all the potential risks and how they may affect you; then decide if your standard policy could benefit from additional protections or increased coverage. And then get in touch with an insurer who takes into account your unique situation.