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Thinking of living on the waterfront in Brooklyn, Queens, Lower Manhattan or the New Jersey Gold Coast? Here's why you should get renters insurance now

As concerns about climate change continue to rise, insurance companies are becoming more restrictive with policies. 

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One of the great things about living in the New York City area is that you’re usually never too far from the water—be it river or coastal. But as Hurricane Sandy made quite clear with the extensive (and expensive) damage it caused, that proximity can also be problematic. Getting the right renter, co-op or condo insurance is more important than ever, even as your options are beginning to narrow.

“The insurance industry overall is more focused on climate change and increased storm severity, which is affecting traditional apartment insurance rates and policies,” says New York City apartment insurance broker Jeffrey Schneider of Gotham Brokerage. “If you live, or are thinking of renting or buying in an area affected by rising water levels and increased storm severity, you could pay as much as 10 percent more for apartment insurance.”

You may also have an increasingly hard time getting apartment insurance at all.

“Some insurance companies are already refusing to insure in coastal areas,” says Schneider.

Your success—or failure—at securing insurance will depend on factors including your building’s wind exposure and its elevation.

Apartment insurance versus flood insurance

It’s important to know that apartment insurance and flood insurance are not the same thing, and provide different coverage.

Flood insurance is legally mandated for any building in an area zoned as high risk for flooding, and it is usually issued by the federal government. (Are in you in a high risk zone? You can find out here.) Flood insurance covers up to $250,000 for a building’s structure and $100,000 for contents, and is only for damage sustained by flooding.

Apartment insurance covers the contents of your home for incidents of theft, accidents, fire, and other events, including high winds that often accompany severe storms.

Standard insurance policies cover water damage from bursting pipes and overflows. They also cover rain damage to the interior but only after the exterior of the building has been breached by a peril like wind or collapse from the weight of ice or snow. You can sometimes add coverage for backed up sewer or drains. But they do not cover for rising ground waters from rain  or rivers, oceans, lakes, etc; this last peril requires a flood policy.

“Even though flood is not covered by apartment, co-op, or condo insurance, insurance companies do not want to insure in high-risk areas because flood and wind claims tend to come in tandem in a storm and it can be difficult to pinpoint which damage came first,” says Schneider.  

Not all waterfronts are the same

Not all “coasts” are exposed to equal risk when it comes to potential storm damage, so living on the water does not automatically mean you’ll have a hard time getting apartment insurance. (The same goes for flood insurance. In the coastal neighborhood of the Rockaways, where damage from Sandy was extensive, some homes are classified as having the most severe risk of flooding, while others nearby are considered low-risk, due to differences in elevation.)

Schneider says the East Side of Manhattan and parts of Brooklyn facing Manhattan have less risk of sustaining storm damage, in part because of protection from high winds. Accordingly, owners and renters in those areas should have a relatively easy time securing apartment insurance, with negligible difference between their rates and those for apartments further inland.

Is your neighborhood at risk for losing coverage?

Schneider says neighborhoods on the water side of the Brooklyn-Queens Expressway in Brooklyn such as Brighton Beach, Coney Island, and Bay Ridge; those in the Bronx close to the bridges, and pockets on Long Island are more vulnerable to storm damage (and therefore more of a concern for insurance companies). Some communities along New Jersey’s Gold Coast and in Jersey City are also higher risk for storm damage. Factors influencing vulnerability include how far a building is from the water and its elevation.

Different companies, different guidelines

While it’s true that some companies have stopped writing policies for renters and owners in these areas of New York and New Jersey, the guidelines for approving or denying coverage vary from provider to provider.

Some require policy holders to live at least a quarter of a mile from the shore, others want apartments to be a mile from the water. But there’s no “sort-of-risky-but-not-that-bad” coverage.

“It’s more binary. Either you can get it from a company or you can’t,” says Schneider, who notes that you shouldn’t be discouraged by a single refusal. “I often have to make several calls for clients, but just because one company says ‘no’ doesn’t mean they all will.”

That said, if you live in a waterfront area, it’s wise to act now to get coverage and a potentially lower rate in the event you eventually can’t get them at all.

“As time goes on, more companies are going to be more and more restrictive,” says Schneider.

If you live in a vulnerable area and already have coverage, it’s unlikely your policy will be canceled, but you may be hit with a higher deductible or have to prove you’ve taken steps to mitigate potential damage.

Finally, whether you are shopping for apartment insurance or have an existing policy, make sure that you are covered for wind damage. “When there’s massive flooding, wind and water damage can be difficult to separate,” says Schneider.  

Gotham Brokerage Co., Inc., an insurance brokerage, has been serving NYC renters, co-op and condo owners for over 45 years. For a free quote, click on over to Gotham Brokerage or give them a call at 212-406-7300.