You’ve finally found your dream home in New York City. But now that the fun part is over, it’s time to start thinking about what you need to do to protect your investment. Whether you purchased a condo in The Plaza or a historic brownstone in Brooklyn, insurance is your new best friend.
Ideally, you already have a policy in place. If you don’t, there’s no time like the present to learn how homeowners and condo insurance differ and how to get started on finding coverage.
How Homeowners and Condo Insurance Differ
When it comes to buying a home or a condo, a big difference between the two of them lies in the type of insurance and how much of the property has to be insured. When you purchase a new home, you are responsible for insuring not just everything inside of it, but the property it sits on as well. However, with condo ownership, you are typically only responsibility is to ensure you insure the inside of your home.
Condo ownership is different than home ownership in that the condo building structure, the outside property and the common areas of the building are generally owned jointly between you and other condo occupants and the insurance for these areas are provided through your homeowners association (HOA). And, since owning a condo does come with different responsibilities, you wouldn’t want to set up your insurance for your condo the same as you would with insuring a house.
Have questions? That’s understandable. Below, we’ve taken the time to break down the specific differences between homeowners and condo insurance in Q&A form.
Insuring a Home
What Are You Responsible For?
When you own a home, you’re responsible for 100% of it. You own the flooring, the walls, the appliances, the plumbing, the electrical, the windows, and the property surrounding it. When you own a home, you’re completely on your own when it comes to repairs and replacements. This is what scares many potential homeowners away.
Renting seems like less responsibility. But with this responsibility comes great reward. You’re paying for an investment when you own a home. But when purchasing homeowners insurance, you can expect premiums and deductibles to be higher. You’ll also need to do more research to make sure you’re completely covered under your policy.
What Does Homeowners Insurance Cover?
Your standard homeowner’s insurance policy, say for a single-family dwelling, can be as simple or as comprehensive as you need it to be depending on what your lender of your mortgage allows. The standard homeowner’s insurance policy for a single-family dwelling will generally cover the entire structure of your home, as well as the construction materials like the cabinets in your kitchen and other permanent structures.
Your personal property is typically covered as well along with other structures like sheds, detached garages, and such.
What Are Common Homeowners Insurance Claim Risks?
A freestanding home comes with different risks that condos or apartments. While anything can happen (trust us), there are certain claims that are more common than others when it comes to homeowners.
- Wind and hail: This is the most common type of homeowners insurance claim. While some are related to hailstorms and hurricanes, a strong thunderstorm is all it takes to damage siding and roofs. You’ll want to double check that your policy includes coverage for this peril.
- Property damage: Maybe you’re not the most popular homes in the neighborhood and end up with eggs all over your freshly painted fence. Maybe you find a spray-painted message on your garage. Or let’s say the damage isn’t intentional. Your landscaper accidentally trims the wrong bush. The kids playing catch in the backyard break a window. If you’re a homeowner, this can all happen. And your insurance should cover it.
- Theft: Theft is more likely to occur at a residential unit than within a condo unit. Because there are more ways to enter (think windows, garages, and back doors) and neighbors are less likely to hear a break-in happening, homes are an easy target. With over 12,000 burglaries a year in NYC, it makes sense that this is one of the most common claims.
Do I Need Additional Coverage?
Your homeowners insurance policy should cover four things.
- Dwelling coverage
- Personal property coverage
- Liability coverage
- Additional living expenses coverage
To see if your standard policy offers enough coverage, you’ll need to go through each section and do a little investigating. First, speak with your insurance broker to make sure you fully understand the limitations of your policy. Then it’s time to start crunching some numbers.
The average New York home costs just over $280,000. When disaster hits, the average amount of damage per square mile in New York is $95,000. This means that in most cases, your insurance policy should offer adequate protection. But if your home is above this average cost, which it most likely is in NYC, then you need to speak to your insurance broker about adding on an umbrella policy or expanding your coverage.
How Do I File a Claim?
Filing an insurance claim for a single-family dwelling or similar is pretty straightforward, and you file the claim directly to your insurance company. You’ll answer any questions, fill out any paperwork, and wait for the claim to be approved or denied.
How Much Does Homeowners Insurance Cost?
The cost of homeowners insurance in New York varies greatly. Your premium will depend on the size of your home, the size of your lot, what your personal property consists of, your claim history, and your location.
Location plays a large roll in your yearly cost. For example, homeowners in Utica pay just over $600 a year on average for a homeowners policy. But in New York City, the average annual premium is around $1,200.
Insuring a Condo
What Are You Responsible For?
When you own a condo, it’s actually only the unit itself that you own, which is only a part of the entire complex or structure. You have a deed entitling you to this private living area as well as the “common areas”, like clubhouses, pools, entrances, and so forth, which you and your guests enjoy. In a complex that has say 10 condos (private living areas), you would hold the deed on one of the condos (the one you bought) and based on the deed’s provisions, you would be the owner of that one condo as well as hold a designated “share” of the common areas.
This means you’re only responsible for your condo. But here’s where you’ll need to get specific. Different condos have different definitions of what you own. Some say you’re responsible for interior walls, plumbing, appliances, and so forth. Others may say you’re only responsible for what you can see, such as tile, light fixtures, and windows. As you can probably see, the definitions can sometimes overlap. Make sure both you and your insurance broker understand what you’re responsible for before drafting a policy.
What Does Condo Insurance Cover?
Insurance for a condo generally covers your furniture, appliances, bathroom and kitchen amenities, wall decor, the walls within your condo and your personal belongings. Any upgrades you make to your condo, such as installing ceiling fans, lighting, wood floors, plush carpeting or built-in wall units, would also be covered. Permanently attached items of your condo like cabinetry, attached appliances and interior walls are your responsibility to insure so make sure you get enough coverage for them.
A standard condo policy will typically provide you with even more coverage than this. For instance, a standard condo insurance policy (sticking inside your limits) may also cover you for:
- Personal property like your computers, furniture, televisions and artwork that has been damaged or stolen in a burglary or other covered peril.
- Loss assessments for any of the common property of the entire complex community that is a covered peril and you are billed by the association for repair costs.
- Any damage you cause to another person’s property.
- Temporary housing costs for a covered loss that keeps you from being able to live in your condo.
- A guest’s medical payments from an injury they sustain on your property.
What Are Common Condo Insurance Claim Risks?
When you live in a vertical NYC dwelling, you’re more at risk for certain types of claims. While no building or unit is safe from fires or burglaries, there are other types of claims that are more common. These include:
- Water fixture overflows: If you have kids, you know how they love to leave the sink running. Even adults can forget to turn the handle from time to time. Plenty of fixtures in your bathroom can leak, including the toilet, sink, and tub. If the overflow is caught early, damage will hopefully be limited to your unit. But if water runs all day and night, the damage can quickly find its way into units below and around you.
- Dog bites: With about 600,000 dogs calling NYC home, there are plenty of furry friends around the city. When you put enough in a building, it’s only a matter of time before an incident occurs. In close confines, like elevators or hallways, a bite can happen quickly.
- Leaky AC units and pipes: NYC can get hot and older buildings rarely have central air. Most residents rely on cooling units to beat the summer heat. But when a unit goes bad, it can leak water into the wall. Usually, the problem isn’t detected until the damage is done.
Do I Need Additional Coverage?
You’ll need to ask yourself a few questions before answering this. First, you’ll want to make sure you understand what your HOA policy covers. Then, estimate what it would cost to repair your condo if it was a total loss due to fire or other disaster. Would you be responsible for replacing lighting? Flooring? Cabinets?
Add this estimate to the value of your personal items. See how close (or far) this number is from your policy limit. Keep in mind that it will cost more to have the work done than what you’ve estimated because of labor costs and rising material costs. Go over the numbers with your insurance broker and discuss the addition of an umbrella policy to provide additional coverage.
How Do I File a Claim?
If you own a condo and need to make a claim, the responsible insurance agency needs to be determined. Depending on what the claim is, you will either go to your insurance agency or the building will handle the claim through the HOA policy.
For instance, if you have burst pipes that cause water damage on the outer wall of your condo; this would be the responsibility of HOA. However, if it was a kitchen sink pipe that caused water damage, your own insurance would cover that.
How Much Does Condo Insurance Cost?
A basic policy can be as low as $300 per year. But don’t expect to receive a ton of coverage for this amount. Policies can be custom, so premiums can vastly vary but condo insurance in NYC can be purchased for less than $2,500 a year with ample coverage. It surprises NYC condo owners to learn that the difference between $100,000 and $1 million worth of coverage is often less than $100 a year.
While there are differences between homeowners and condo insurance, the basics are the same. First, you need insurance. Second, you need to make sure your coverage is adequate. Finally, it helps to know both types of insurance are affordable. Now that you know how homeowners and condo insurance differ, you can speak to your insurance broker about making sure your coverage is ideal for your needs.
