What if a kid’s baseball broke your front window and then a torrential thunderstorm blew in and ruined everything in your living room while you were on vacation?
If you are like many young renters in NYC, rather than having the foresight to spend a few hundred a year on renter's insurance, you’d just go back to Ikea and plunk down $1,000 for new furniture (and, if you live sufficiently high up, you’d probably try and go get a sports agent for the young slugger).
That's all well and good for you. Not so much for landlords like me, who increasingly require tenants to show proof of renter's insurance when they sign or renwew a lease. (In fact, the model Blumberg Lease I use requires it.)
- It is really easy to do $50-100k worth of damage to an apartment or apartment building, even inadvertently. Accidentally knocking the hose off of a dishwasher could send a flood of hot water down to every unit below yours, wrecking ceilings, electrical and hardwood floors. Since most tenants don’t have that much money, the landlord is often powerless to sue unless the tenant has insurance.
- Landlords want another "deep pocket": Your friend should sue your renter's insurance company first when her toddler bashes his head into the corner of your glass coffee table. Even if your landlord isn't remotely liable, defending a lawsuit often costs more than settling it, especially in Brooklyn and the Bronx, where juries often do strange things.
- Rent-stabilized leases must be renewed under ‘the same terms and conditions’ as the original one. So they become this veritable grab bag of unpleasant lease clauses; anything that remotely benefits the landlord gets stuffed into the lease, and if you want the apartment, you can’t say no. Plus, if you drop coverage, it gives the landlord an easy way to try to evict you. This is why you see requirements for renter's insurance in areas that have rent regulations, and where, accordingly, new tenants have basically no bargaining power.
- The Bozo Factor: Basically, if something breaks in your apartment, your landlord doesn’t want you to bother him about it. ‘Take it up with your insurance company’ is a great way to dismiss annoying tenants.
Bear in mind that renter's insurance doesn’t cover everything--it excludes hurricanes, floods, earthquakes, and most importantly, drain and sewer line backups. One basement-dwelling tenant had his sewer line freeze in a cold snap. After three inches of raw sewage accumulated in his apartment, he was quite literally SOL, though in this case, the landlord comped him a free month and paid for an intensive decontamination.
Small landlords often don’t require renter’s insurance either because they don’t know about it, don’t think that the protection is worthwhile, or would prefer to get higher rents from their tenants.
So, in summary, more and more NYC landlords require renters’ insurance because (a) they can, (b) it doesn't cost them anything, and (c) it could save them tens of thousands of dollars
If your landlord isn't hip to this yet and/or you are a good tenant with worthless stuff, you might get away from spending a few hundred bucks a year on insurance, but don’t count on it happening forever.
Lessons from a Small Landlord is a bi-weekly column penned by a real-life NYC landlord whose pseudonym is Craig Roche.