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The Impact Of Home Insurance Regulations For New York State Residences
2010-02-19
Homeowners insurance in the state of New York is regulated by the New York State Insurance Department. General home insurance in the state is divided up into eight categories - HO-1 through HO-8, which cover single dwellings, rental properties and tenants. They also offer varying levels of coverage depending on the needs of the consumer.
An HO-1 policy, for example, will cover a home and its contents against basic perils such as glass breakage or personal injury, but will exclude coverage on anything not explicitly listed. Many companies in the state of New York no longer even sell HO-1 policies, choosing instead to advertise far more comprehensive coverage.
HO-3 is one such type of coverage, and is the most popular type currently issued in the state. The HO-3 policy works in a manner opposite to the HO-1 policy, in that all perils to the home will be covered except those explicitly listed. For example, flood or earthquake damage may be excluded, and will be written into the home insurance coverage that way. In this type of policy, the homeowner receives much greater coverage for a broader range of potential problems. New York residents must also bear in mind that any policy which does not cover 80% of the value of the home will be deemed to have inadequate insurance if a home insurance claim is filed. What this means is that the insurance company will not treat the claim as a "replacement cost" situation, but as a "market value" one, and this can be devastating for homeowners. This is because a home insured for 80% that is destroyed or damaged will be re-built at the current replacement value of the dwelling. A home without 80% coverage will be paid out only market value, which is the original price of the home minus depreciation, which can significantly limit the amount of money obtained.
New York also has a public underwriting company which does not compete in the private market. The New York Property Insurance Underwriting Association covers those homeowners who are unable to obtain insurance via traditional means, but the premiums will always be higher than those of a voluntary or private insurer. New York State doesn't require hurricane coverage, but some companies offer it now that the State had mandated minimum deductibles for coverage, beginning at 1% of the insured amount. Clients must bear in mind, however, that this type of homeowners insurance coverage will only kick in if the hurricane meets the standards set out in the insurance policy - and these standards differ greatly. Although dominated by private companies selling comprehensive insurance, the New York home insurance market also features public options and limited coverage for those who want it.