It may be better to hold onto your NYC renters insurance, condo insurance and co-op insurance for the big stuff
Photo by Beyond My Ken / Wikimedia Commons
NYC renters insurance can be as tricky as it is necessary. That’s why it’s important to understand the rules.
A thief in the night trying to make a clean getaway while you’re out walking the dog wants to be in, out and on his way. He’ll grab that iPad on the bookcase for sure; any loose cash lying around; maybe a quick dump of your jewelry box.
As soon as you’ve called the cops and live-Tweeted the aftermath — nosy neighbors, whining dog, vacuuming up the door splinters — the first thing you’re apt to do is consider your hundreds of dollars worth of losses and get on the phone with your insurance agent.
But hold the phone a minute.
Did you know that filing just two legitimate claims in three years can result in the cancellation of your insurance policy? Whether you’re at fault doesn’t matter. Most companies use a statistical model to determine whether you’re a profitable client. Every three years, your insurer reviews your claims history. A single questionable claim is enough to get you canceled, and most insurance companies will either decline to renew your policy or significantly increase your rates if you’ve had two legitimate claims.
That’s going to leave you out in the cold, insurance-wise, forcing you to consider either going without coverage or seeking it from the costly “excess market” rather than from reliable companies with non-regulated rates and stricter coverage requirements.
There is one big exception to the two-strike rule: Claims from major disasters like Hurricane Sandy are considered “catastrophic losses” by the insurance industry and are not counted.
What should you do? For smaller claims, it makes sense to pay for your losses out of pocket. And that’s also a good reason to consider raising your deductible. Deductibles on apartment insurance are typically offered at increments such as $250, $500, $1,000 and $2,500. Raising your deductible up by just one threshold usually triggers a reduction of about 10% of your premium. Multiply that savings by each additional deductible hike. Go from a $250 deductible to $1,000 and you could save 20% — an annual savings of a few hundred dollars or more on a typical co-op or condo insurance policy.
So you probably shouldn’t mess around with small claims. Resist the urge to think, “I’ve been paying my insurance for six years without a claim and so I’m going to file a small one to get some of my money back.” The next thing you know, a big incident happens.
It’s usually better to buy a policy with a high deductible ($500 for smaller apartments and up to $2,500 if you are insuring several hundred thousand dollars of value), and pay for smaller misfortunes out of your own pocket.
An important exception to the claims rule: Always report any situation in which it’s difficult to assess the damage and which could result in a serious claim or potential lawsuit later, such as water damage from an overflowing tub or broken pipes. The consequences to someone else’s home or health can be difficult to determine initially.
Gotham Brokerage has been in business for more than 50 years. We work with multiple insurers, so we can tailor our products to whatever you need. You can feel confident with our A+ rating from the Better Business Bureau, and we can help find the right renter’s insurance policy for you. Give us a call at 212-406-7300.
