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I'm renting out my NYC place as a furnished apartment. Should I take out more insurance?

Most apartment insurance policies are voided if you sublet, our experts say, so you'll definitely need to update your coverage.

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Question:

I'm going to rent out my apartment. Should I put my furniture in storage, or rent my place furnished and take out more insurance to cover wear and tear? If I rent it furnished, can I charge more?

Answer:

Most apartment insurance policies are voided if you sublet, our experts say, so you'll definitely need to update your coverage.

"At a minimum, your policy has to be endorsed or rewritten to cover you as a landlord," says Jeffrey Schneider of Gotham Brokerage (a Brick sponsor). "The insurance will not necessarily cost more, but there will be coverage differences." 

Speak to your insurance broker about your subletting arrangement to find out what kind of coverage you'll need. You should also consider requiring any subletter to have their own coverage. 

"Most carriers will want your tenant to have his or her own renters insurance and a lease of at least six months," Schneider says. 

There are no separate policies for covering furniture, but your belongings can be added to your "landlord" coverage. But keep in mind that theft is not covered, nor is damage caused by your tenants, Schneider says, so you'll still need to collect a security deposit from them. 

The 2019 changes to the rent laws in New York State instituted a cap on how much security landlords collect—you can now only ask for one month's rent. The monthly rent you can charge a subletter also depends on the type of apartment you live in. If you're in a rent-stabilized apartment, for instance, you can only charge 10 percent more than your usual rent if you're subletting the place fully furnished. (There are many other restrictions too that you should brush up on.)

If you're subletting your market-rate unit, you have more leeway in terms of the rent you can charge subtenants. Research similar rentals on listing sites to get a sense of what is the appropriate rent for your furnished apartment and you can also talk to a rental broker. And make sure you have the approval of your condo or co-op board before you go ahead with the sublet. Some buildings have restrictions on subletting and you don't want to find out about these after you've gone to the trouble of finding a renter.


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