The purpose of insurance in New York is to minimize financial uncertainty and manage losses by substituting insurance premiums for risks. Insurance is a financial safety net that helps you and your loved ones recover from unexpected events. There are different types of insurance policies available in New York:
We have insurance policies in New York to alleviate residents' fear of sudden misfortune by mitigating loss through services and financial compensation. In addition, insurance helps to enhance the insured's security and peace of mind. All insurance entities in the state are strictly regulated under the New York Insurance Law.
As of the end of 2021, over 19.8 million people lived in New York, each of whom had unique insurance needs. Some were in dire need of basic health insurance coverage, while others needed to insure their lives, personal property coverage, and businesses.
Comprehensive health insurance is the most important insurance coverage for everyone, and over 1 million New York residents under 65 years are without proper health insurance coverage. With health insurance, there will be access to care, minimizing death rates, increasing health outcomes, and improving productivity.
New York is prone to natural disasters like severe storms, floods, winter storms, tropical storms, wildfires, blackouts, tornadoes, landslides, droughts, and tsunamis. In 2021, more than 130 wildfires were recorded in New York. As of 2022, more than 780,000 single-family structures in the New York metropolitan area were at risk of storm surge, with an expected reconstruction cost value of nearly $370 billion. Also, almost 110 thousand multi-family structures faced similar risks with a reconstruction cost of over $62 billion. About 3.8 million single-family structures in the New York metropolitan area are at risk for hurricane wind, with a reconstruction cost value of over $1.9 trillion. Additionally, nearly 460 thousand multi-family structures face similar risks with a reconstruction cost north of $260 billion. Therefore, residents of New York should get disaster insurance to protect against prevalent natural disasters in their locality.
There are over 11.3 million private, commercial, and publicly owned vehicles registered in New York each of whom needs insurance coverage. Out of these, there are 4.2 million automobiles, over 82 thousand buses, over 6.5 million trucks, and nearly 400 thousand motorcycles. Bodily injury and property damage coverage policies are mandatory for all vehicles in New York, and other insurance policies might be needed depending on the type of vehicle and its usage. For instance, vehicles used for business purposes would require commercial auto coverage. Auto insurance covers:
Property: Damage to or theft of your car
Liability claims: Third-party claims as a result of bodily injury or property damage
Medical expenses: The cost of treating injuries, rehabilitation, lost wages, and funeral expenses
As of 2021, there were over 8.5 million housing units in New York. Owner-occupied residences comprised 54.1, while 45.9 were rentals. Owners or renters of these residential dwelling units need to have insurance policies to cover losses or damages that might affect their structures or personal belongings. For instance, homeowners insurance, condo insurance, renters insurance, and landlord insurance policies will be appropriate for housing units depending on who owns the properties and how they are used. Speak with a licensed professional to protect your home.
In 2020, New York was home to about 540 thousand business establishments. That same year, Private industry employers reported about 129,000 nonfatal workplace injuries and illnesses in the state. Businesses in New York are prone to data breaches, workplace injuries, and property damage due to snowstorms, theft, vandalism, fire, winds, etc. Therefore, it is important to have commercial insurance coverage that would help protect these businesses from different claims and risks. The type of coverage to purchase largely depends on the business type, property owned, and the lender & industry regulations.
In 2021, there were 3.4 million seniors (65 years and older in New York). In 2022, 47% of Americans did not have active life insurance, and 46% died with savings of less than $10,000. There can be a lot of financial strain on individuals whose breadwinners lack life insurance policies. Everyone needs life insurance policies to provide financial protection for their loved ones at their demise. Beneficiaries can use the death benefits obtained from the policy to cover expenses like medical bills, college tuition fees, funeral expenses, retirement income, and mortgage. Also, insureds can use the living benefit option in their life insurance policies while still alive. They can access funds from their death benefit to treat terminal or chronic illnesses like major organ transplants, cancer, stroke, paralysis, heart attacks, loss of limbs, autoimmune diseases, major burns, and blindness.
What is insured by insurance in New York largely depends on the type of insurance policy you wish to purchase. What is insured by an insurance policy includes but is not limited to properties like cars, homes, and other personal belongings. Also, you can insure your life by purchasing a life insurance or health insurance policy. Similarly, you can insure your business, employees, and business properties. You can discuss with a New York licensed insurance agent who can help you choose the right insurance policy that suits your current and future needs.
An insurer is an organization that pays out compensation to people, companies, or other organizations for specific financial losses. These financial losses can arise from the destruction of a home, business property, vehicle, etc., due to a covered peril or accident. Generally, insurers design the insurance policy and set the terms of the insurance agreement. The word insurer is commonly used interchangeably with the insurance company, insurance carrier, or underwriter. As of 2020, there were about 555 domestic and 1,179 licensed foreign insurers in New York.
In New York, an insured is a person or entity that purchases insurance coverage from an insurance company. Typically, an insured receives payments from their insurer after filing a claim for damage or loss caused by a covered peril that qualifies for payment under the policy’s terms. The insured's insurance coverage remains intact as long as premiums are paid. However, the policy lapses if the insured stops paying premiums.
In New York, an insurance policy is a contract between the insured and the insurer outlining what the insurance coverage entails. There are different types of insurance policies available in New York, including health insurance, life insurance, and property and casualty insurance, which serve specific needs and feature various plans.
An insurance policy in New York consists of several standard forms like:
Declarations page: It is also known as the dec page, which summarizes the information that is important to the insurance coverage. The declarations page includes the insured’s name, address, location, policy term, and other essential information,
Coverage page: Contains the coverage types, coverage conditions, and the insuring agreement (including your deductibles, discounts, coverage limits, and endorsements)
Exclusions: This refers to the hazards, perils, circumstances, items, services, or properties not covered by the insurance policy
Policy conditions: These are general requirements to be met by the insured and the insurer for the insurance policy to be valid
Endorsements: Policy forms that add or modify the insurance coverage.
Insurance coverage is the amount of liability, risk, or potential loss covered by insurance. It is also the maximum monetary amount of risk that an insurer agrees to pay out in the event of a claim. For example, if your insured vehicle is stolen and you file a claim, your comprehensive auto insurance coverage will bear the cost of replacing it. However, if your insured car is damaged due to a collision with another car, your comprehensive auto insurance will not cover it because it is outside your coverage. You will need to have collision auto insurance coverage to cover it. Generally, for coverage to continue, the insured needs to pay a premium regularly.
You need insurance in New York as a financial backup during emergencies like accidents, medical emergencies, damage to property, business lawsuits, and death that can leave you and your family members facing tremendous emotional strain. For instance, New York residents need life insurance to protect their loved ones from financial losses that may result from their death. They also need disaster insurance to protect their homes and business properties from natural disasters like floods, severe storms, wildfires, blackouts, tornadoes, landslides, droughts, and tsunamis. Not having disaster insurance means you will be responsible for mitigating expensive repairs and rebuilding costs when disasters destroy your residential or commercial property.
You need some insurance policies in New York because they are mandatory. New York law requires that all motorists have auto liability insurance coverage. The minimum amount of liability coverage is:
$25,000 for bodily injury and $50,000 for death for a person involved in an accident
$50,000 for bodily injury and $100,000 for death for two or more people involved in an accident
$10,000 for property damage for a single accident.
Also, New York contractors must carry commercial general liability insurance, and all employers must provide workers' compensation coverage for their employees. Although some insurance policies in New York are not mandatory, they are still major necessities for residents. For instance, over 1 million New York residents under the age of 65 are without proper health insurance, which might put them at risk of having to cover medical payments out of pocket. Health insurance saves insureds from financial crises and minimizes out-of-pocket expenses for doctor and hospital visits, prescription drugs, medical devices, and wellness care. Identifying your specific needs is the best way to decide what type of insurance to purchase. You can get a New York-licensed insurance agent to help with this. Here are some things your agent will consider when analyzing your insurance needs:
Standard of living
Assets such as your businesses, home, cars, etc.
Family size and number of children
The present state of your health.
Purchasing insurance in New York comes with a lot of benefits, including:
Protection for you and your family: Life insurance helps protect your loved ones from financial hardship in the event of your demise. Also, you can use the living benefits option in your life insurance to get funds from your death benefits while still alive.
Cover damage or loss to the insured vehicle: In case your car is damaged due to an accident or suffers losses due to theft, auto insurance will cover the cost of fixing your vehicle or replacing the stolen car.
Coverage for medical expenses: Health insurance can take care of hospitalization, prescription drugs, surgery, and basic health bills.
Coverage for property: Property insurance can help protect your property contents and structure in the event of a covered peril.
Maintenance of living standard: If insureds become disabled due to injuries or illnesses that prevent them from working, disability insurance covers expenses and lost incomes, allowing them to focus on recovery while maintaining their lifestyles.
Purchasing different New York insurance plans like life, health, disaster, property, and other insurance policies prepares you and your loved ones for unforeseen strategies like death, illnesses, losses, and damages. Discuss your insurance questions and needs with a trusted and knowledgeable New York-licensed insurance professional. An experienced agent would help you assess your needs, figure out how much coverage is needed, and find multiple options to fill your coverage needs. Let your agent know about all the coverages you may need, including business and personal possessions. The more policies you bundle under the same insurer, the more you typically save overall.
Yes, insurance is very necessary for everyone. Insurance helps relieve you of financial struggles and setbacks you cannot handle alone. In addition, insurance gives you financial security and peace of mind in the event of unforeseen events. There are different types of insurance policies in New York, and they include:
Chronic diseases like cancer, diabetes, stroke, heart disease, and arthritis are the leading causes of disability and death in New York. More than 40% of adults residing in New York suffer from a chronic disease, and these diseases are responsible for about 23% of all hospitalizations in the state. In addition, six out of every ten deaths in New York are caused by chronic diseases, and heart diseases and cancer alone account for over half of all deaths in the state. Getting Health Insurance that covers medical expenses is advisable because medical emergencies are usually unplanned. Health insurance covers whole or part of medical expenses like hospitalization costs, cost of medicines, or doctor consultation fees incurred by an insured due to illness, accident, or injury. There are different types of health insurance policies available in New York. Some of them are:
Managed health care plans: This is a health insurance plan with primary care practitioners (PCP) coordinating health care for enrolled members and referring insureds to specialists or other health care providers. Insureds must select health care providers from the managed care plan's network of professionals and hospitals. Insureds do not need to pay out-of-pocket for covered services under the managed care plans because the insurer pays the health care providers directly. However, insureds might have to pay co-pays directly to the healthcare provider at the time of service.
Medicaid: As of 2021, more than 7.3 million lower-income New Yorkers benefited from New York's Medicaid program. Insureds can benefit from a wide range of services under the Medicaid program, depending on their ages, financial circumstances, family situations, or living arrangements. An extensive network of healthcare providers is responsible for making these services available to insureds with Medicaid cards or through managed care plans for those enrolled in managed care.
Medicare: This is a federal health insurance program for individuals 65 or older, but younger people with certain disabilities and diseases may also qualify. Medicare helps cover specific services like the cost of prescription drugs, inpatient hospital stays, preventive services, skilled nursing facility care, hospice care, outpatient care, and medical supplies. Over 219,000 New Yorkers enrolled in private individual market plans through the State-based Marketplace (SBM) during open enrollment for 2022 coverage.
Child Health Plus (CHP): This is a government-sponsored insurance program for individuals in New York under the age of 19. Eligibility for CHP coverage is based on the family’s resources and income, and members or members' families may have to pay part of the premium. Primary care physicians are responsible for caring for CHP members through a designated network of providers.
Life insurance is a contract between an insured and an insurer that guarantees a death benefit to policy beneficiaries at the insured’s demise. This death benefit can pay off debts, college tuition fees, daily expenses, and funeral arrangements. Insureds pay premiums monthly or yearly during their lifetime. Sometimes, insureds can take advantage of living benefits under life insurance policies. This means they can get funds from their death benefits while still alive. For example, the money received by the insured can be used to pay for a chronic, terminal, or critical illness or as a financial savings tool to cover children’s tuition fees or satisfy the insured’s tax-free retirement needs. There are two types of life insurance policies in New York:
This type of life insurance guarantees payout only if the insured dies during a specified term. No death benefits will be given to beneficiaries if the insured does not die within the policy term. However, the policy can be renewed or possibly converted to permanent life insurance. Term life policies do not have saving components and can typically last for 10, 20, or 30 years.
(Also known as Cash Value Life) This type of insurance lasts throughout the insured’s lifetime unless nonpayment of premiums causes the policy to lapse. Most permanent life insurance policies combine death benefits with tax-deferred savings components called cash value. The premiums paid by insureds go towards maintaining the policy’s death benefit and allowing the policy to build cash value. When money accumulates in the cash value, the insurance can borrow against that cash value, withdraw cash from it to meet an urgent need, create an investment portfolio or pay for premiums with the cash value. Permanent life insurance policies are usually more expensive than term life insurance policies.
Common types of permanent (cash value) life insurance policies in New York are:
Whole life insurance: This type of permanent life insurance provides death benefit coverage throughout the insured's lifetime. In addition to paying a death benefit, whole life insurance also has a cash value that accumulates interests at a fixed rate and on a tax-deferred basis. Some benefits of whole life insurance are that the premiums are consistent, and you can use funds from your cash value while still alive. The disadvantages of whole life insurance are lack of investment control, high premiums, and relatively small death benefits.
Universal life insurance: This is permanent life insurance that lasts throughout an insured's lifetime. Universal life insurance has low premiums and a cash value component like term life insurance. Some advantages of universal life insurance are that it is flexible, the cash value can be increased, and the cash value grows at a variable interest rate. The disadvantages of universal life insurance are that there is no guaranteed level premium, and the policy can lapse if there is no money in the cash value account.
Indexed Universal Life (IUL) Insurance: This permanent life insurance provides lifelong coverage. IUL has death benefits that are paid out at the insured's demise, and there is a cash value tied to a market index that grows tax-deferred. Purchasing IUL at a young age allows you to grow your cash value and have a higher death benefit. One significant advantage of IUL is that insureds can use the cash value feature to earn interest that they can use to pay premiums, supplement retirement income, or withdraw or borrow against in case of an emergency. One major disadvantage of IUL is that it can be more costly in the short term compared to term life insurance, but it becomes much cheaper in the long run, as it has a cash value growth without market loss worry/potential loss. Another disadvantage of IUL is that the percentage on the account is usually capped, and the policy can come with a lot of administrative fees and surrender charges.
Variable Universal Life (VUL): It is an insurance policy that lasts throughout an insured's life. It also has an investment component where insureds directly invest in the stock market and can have the market risk of loss or gain. Some advantages of VUL are that it has flexible premium payment options and no decrease in death benefits as long as premiums are paid. The disadvantages of VUL are that it can be more complex than other types of insurance policies, and the policy comes with many fees.
Various factors affect the cost of life insurance in New York, including:
Gender: Women's premiums tend to be lower than men of the same age and with similar health conditions because they have a longer life expectancy. For instance, A healthy 35-year-old woman in New York can buy a $500,000, 20-year term life insurance policy for $27.65, while a man of the same age and health status will have to pay $33.27 for the same coverage.
Age: The older the insured, the higher the premium because they are of higher risk to the insurer. Older insureds are more likely to die due to old age and other diseases associated with old age, making premiums higher. For instance, a 30-year-old person can pay between $4,372 and $4,985 annually for a $500,000 whole life coverage, while a 70-year-old person can pay between $26,800 and $30,300 annually for the same amount of coverage.
Medical history: Individuals with health issues pay higher premiums than healthy people. This is because those battling health challenges are more likely to die while the policy is still active.
Occupation and Hobbies: Individuals with high-risk occupations like construction workers tend to pay higher premiums because of the risks they are exposed to. Also, individuals who engage in dangerous or adventurous activities like skydiving and racing may have higher premiums.
Although the life expectancy of New Yorkers at birth is 80.7 years old, no one knows when death will come. Hence the need for a life insurance policy to financially protect your beneficiaries after you are gone. You will rest assured that your loved one will be taken care of at your demise. Typically, life insurance can serve the following purposes after the death of the insured:
Paying off your home mortgage
Paying off debts like credit card bills
Taking care of college tuition fees
The payout from life insurance can be used to cater to aged parents.
In New York, property insurance protects the insured's personal property from damage or theft. Property insurance can pay to repair or replace the insured property up to the maximum replacement cost valuation:
Home ownership rate across the New York state residential market is split almost evenly: 54% owner-occupied and 46% for rent.
Homeowners Insurance: Homeowners insurance covers destruction and damage to an individual's self-owned house and the assets in the building. There are over 8.5 million housing units in New York, and each of these homes needs a homeowners insurance policy. Without a homeowners insurance policy, you will be solely responsible for the costs of any damages to your house (such as plumbing leaks, damages to roof-mounted solar panels, and high winds that rip off your roof), which can be very expensive.
Condo Insurance: Condo insurance protects a condominium unit from financial losses resulting from covered perils like windstorms and hail, fire, lightning, explosion, and vandalism.
Renters insurance: It is also known as tenant insurance in New York. Renters insurance covers a renter’s personal belongings in a rented home from perils like smoke, vandalism, theft, explosion, and fire (45.9% of residential dwellings in New York are rentals).
Landlord Insurance: With nearly 45.9% of housing units in New York as rentals, landlords need landlord insurance, which covers the property itself from the possible liability claims arising from the tenants and their guests. Property insurance helps cover the risks landlords face when leasing their residential properties. Landlord insurance covers liabilities, damages to the building structure, and the cost of repairing or replacing any fittings or fixtures damaged during the tenancy in your rental home.
Property insurance comes with several benefits, including:
Protection against power outages: Constant power trips and outrages can cause damage to appliances in the home and can shorten their lifespan. Having property insurance would help cover losses incurred due to lower outages.
Protection against property damage: Property insurance protects insureds against unforeseen disasters and incidents that may happen on their properties.
Protection for expensive items: Property insurance covers damages to expensive personal items like artworks and jewelry.
Loss of use coverage: Property insurance covers insureds' additional living expenses, like hotel bills and groceries, when a covered peril makes their homes unfit to live in.
This is also called commercial insurance. Business insurance financially protects businesses from risks like employee injuries, liability lawsuits, property damage or theft, and other unforeseen events. The types of business insurance available in New York are:
Commercial property insurance: It covers properties used for commercial purposes from perils like fire, theft, and natural disasters. Commercial property insurance can pay to repair or replace stolen, lost, or damaged business property. Commercial property insurance also includes commercial auto insurance, which covers business-owned vehicles and the vehicles driven by business employees in the event of covered perils like accidents, theft, and vandalism.
Commercial liability insurance: Provides coverage to businesses for property damage, personal injury, and third-party bodily injury caused by the business's products, operations, or injuries that occur on the business's premises involving third parties.
Commercial crime insurance: Protects businesses from crime-related losses. Commercial crime insurance covers employees' dishonesty, fraud, theft, misrepresentation, embezzlement, forgery, or any other type of business-related crime in the company.
Business interruption insurance: It covers loss of income when a business is halted due to direct physical loss or damage caused by a covered peril. It can also cover operating expenses, temporary relocation, payroll, taxes, and loan payments.
Commercial life insurance: Commercial life insurance is usually offered as group coverage for all employees of the company or to protect the business in case if a key employee passes away and must be replaced. Another very important use of life insurance in business is to ensure the buy-out and transfer of the business between business partners, in case one of them dies.
Commercial insurance premiums are calculated based on several factors like:
Annual revenue: Companies with higher revenues pay more than companies with low revenues because of the rating basis with which insurers calculate premiums. For instance, the calculation of an insurer using revenues with a rate of “x” per $1,000 will look like this:
Rate = $10 per $1,000 of revenue
Rating basis: total revenue projected for the policy period = $500,000
Premium = $10 * ($500,000/1,000) = $5,000
So from the example given above, you will discover that your premiums will increase when your revenue increases.
The number of employees: Businesses with many employees have high chances of property damage. Hence, companies with many employees may pay higher premiums than companies with few employees.
Business location: Businesses located in an area prone to extreme weather conditions or high crime rates should expect to pay higher premiums. This is because such businesses are at higher risk of thefts, vandalism, and structural damages.
Company/industry type: Every business has hazards and risks that affect the cost of insurance premiums. For example, work-related injuries and accidents are more common in construction companies than in financial consulting companies, whose worries would just be limited to the professional liability that might arise from their advice. Hence, insurers may charge higher premiums from construction companies than financial consulting companies.
Commercial insurance is a necessity for New York businesses because of the following benefits:
Protects business employees: Commercial insurance helps cover the medical bills of injured employees on the job.
Legal Protection: It is common for businesses to be sued by third parties or employees. Commercial insurance helps cover the legal expenses that may come with a lawsuit.
Business assets protection: Commercial insurance helps cover losses to your business assets in the event of a covered peril like fire or theft.
Increases business credibility: Most potential clients would rather do business with companies that have commercial insurance.
Liability insurance is an insurance policy that covers the insured in the event of claims resulting from third-party injuries and property damages. It also covers any legal costs and payouts incurred by the insured if they are found legally liable. There are various types of liability insurance policies in New York. They include:
General liability (GL): This policy covers property damage or personal and advertising injury caused by the business employees, business services, and its operations
Cyber liability insurance: It protects businesses from liabilities incurred from data breaches and other cyber security issues. Industries like healthcare, financial, pharmaceuticals, transportation, technology, and communications suffer greatly from data breaches and cyber security issues.
Employer’s liability insurance: It covers liability claims resulting from employees who have suffered work-related injuries or illnesses. This is different from worker’s compensation because it covers employers when they are sued for punitive damages, especially if they are somehow responsible for it. While workers compensation just covers injuries-related costs without alleging any liability on the employer.
Product liability insurance: This policy protects manufacturing companies from bodily injuries or property damages caused to third parties due to the companies’ products.
Indemnity liability insurance: This policy protects businesses from claims made by clients or third parties due to financial harms caused by negligence.
Director and officer (D&O) liability insurance: This policy protects a company’s board of directors or officers against liability if the company is sued. It also covers the legal fees and other costs that the company may incur due to the lawsuit.
Umbrella liability insurance: This is a separate policy that protects the insured when the limits of other underlying owned liability policies have been reached. Umbrella insurance offers additional protection to help cover personal property damage, injuries, lawsuits, and personal liability situations.
Generally, with liability insurance, business owners can cover third-party property damage or bodily injury claims. It is important for business owners to discuss insurance questions with a licensed insurance agent in New York to ensure they are purchasing the right insurance plans for their businesses.
New York is prone to many natural disasters like floods, severe storms, wildfires, tornadoes, droughts, and tsunamis. For instance, 137 wildfires were recorded in New York in 2021. Hence the need for disaster insurance. Disaster insurance in New York protects residences and businesses against natural disasters (such as floods, earthquakes, and hurricanes) and man-made disasters (like riots or terrorist attacks). Most disasters are not covered under standard homeowners or business insurance policies. Instead, disaster coverage is usually available as add-ons to existing standard property insurance policies. Common types of coverages under disaster insurance are:
Flood insurance: Flood insurance is a type of disaster insurance that covers losses or damage to property due to floods. Factors that affect flood insurance premiums include the location of the structure, the structure's age and design, and the type of coverage being purchased. Flood insurance policies can be bought for commercial and residential properties. (Note: Flood insurance is covered under the separate flood insurance policy administered under the National Flood Insurance Program (NFIP)).
Earthquake insurance: Earthquake insurance is a type of property insurance that covers losses caused by earthquakes to your home, personal belongings, and business properties.
Windstorm insurance: This type of insurance covers damages resulting from windstorms like lightning, hail, and strong winds.
It is better to get a disaster insurance policy for the prevalent disaster in your geographical area. For instance, individuals who live or own businesses in flood zones should consider purchasing flood insurance policies for their homes and businesses. Discuss with a New York-licensed insurance agent to assist with purchasing the right disaster policy that suits your needs and geographical location.
To better understand insurance, you need to understand deductibles and premiums. Then, we will discuss its effects and how they affect each other.
A deductible is the amount of money you have to pay out of pocket towards an insured loss before your insurance coverage kicks in and your insurer pays for your claims. A deductible is how risk is shared between the insured and the insurer.
A deductible is an out-of-pocket cost you have to pay in New York before your insurance company shares in the cost of covered loss or damage. Insureds with high deductibles pay lower premiums monthly or yearly because they bear most of the cost. In contrast, higher premiums mean lower deductibles. Generally, deductibles can either be:
A specific dollar amount: This simply means that a particular amount will be deducted from your claim payment. For instance, if you have $1,000 as policy deductible, and your insurance company has determined that you have an insured loss of $10,000, you would receive $9,000 as claims payment.
A percentage of your premium: This is common with homeowners policies and is calculated based on a percentage of the home’s insured value. For instance, if your homeowners insurance policy has a 2% deductible and you incurred a loss worth $10,000, your claim check would be $8,000, and you will need to pay $2,000 before the check is issued.
The terms of your coverage establish the amount you pay as deductibles, and you can find information on them on the declarations or front page of your insurance policy.
Deductibles have several advantages like:
Higher deductibles lower your insurance premiums,
Deductibles allow insureds to select an amount they can easily pay out of pocket,
Having deductibles removes the temptation to turn in small claims. This is good because having many claim histories can lead to high premiums in the future.
There are also downsides to deductibles, which are:
Insureds with higher deductibles may be unable to afford to pay out of pocket for large losses
Insureds with low deductibles tend to pay high premiums
Always balance your needs with affordability by speaking with a licensed insurance agent in New York.
Not all insurance policies in New York have deductibles. For instance, life insurance does not have deductibles. Deductibles are most common with property, casualty, and health insurance products. The amount fixed for deductibles may vary by plan, insurer, coverage, and premium.
An insurance premium in New York is the amount an insured New York resident pays for an insurance policy. Failure to pay premiums when due or within the grace period may lead to policy cancellation.
When you decide to venture into insurance, you must be ready to spend money. An insurance premium is the amount of money an individual or a business pays periodically to the insurer that provides auto, home, healthcare, or life insurance coverage. The insurance premium is paid by the insured to the insurer to cover risks. It is the price paid for protection from loss, hazard, or harm.
Premium payments can be made monthly, annually, quarterly, or even as a lump sum, depending on the individual or business. The insurance premium is usually determined by the type or kind of insurance being bought, and it is what serves as income for the insurance company.
Insurance premiums can be determined by a variety of options and factors like:
Age: This affects the amount you pay for your premium. Under some insurance policies, the older you get, the higher your premiums. For instance, premiums increase with age under health/life insurance. This is because older people have more health challenges than younger people. Under auto insurance, teenage drivers and older adult drivers pay higher premiums. Teenage drivers lack experience behind the wheel and are more likely to get into accidents. Older adult drivers are more likely to be involved in an accident or injured in a collision.
Type of coverage: Comprehensive insurance coverages tend to attract higher premiums. For instance, in-home insurance policies, insureds with open perils or all-risk coverage pay higher premiums than those with named perils home insurance policy that only covers the basics. Also, insureds with liability coverage in auto insurance pay less than those with comprehensive coverage.
Geographical Location: Where you reside in New York affects your premiums. For instance, with auto insurance, insureds residing in cities with high rates of car thefts will pay higher premiums than those residing in areas with lower criminal activities.
Personal information: Insurers use a lot of personal information obtained from the insured to calculate premiums. This depends on the insurance policy the insured wants to purchase. Most times, the insurer looks at the insured's gender, marital status, claim history, lifestyle, driving record, smoking status, hobbies, and occupation.
Generally, a high deductible usually comes with a low premium. This means that when you select a higher deductible, you will pay lesser premiums but will have to pay a larger amount out of your pocket in the event of a claim. On the other hand, selecting a lower deductible equates to a higher premium, and this means that you will be paying more premiums but will pay lesser out-of-pocket expenses in the event of a claim.
Depending on the agreed payment plan between the insureds and the insurers, insurance premiums can be paid using several options in New York. This may be in installments or even an up-front payment in full before the start of coverage. In addition, the insurance premiums can be paid monthly, semi-annually, or even annually, depending on your risk level. In New York, premiums can be paid:
Monthly: This is a mode of payment in which payments are made every month to keep your coverage running. This mode is the most used because it benefits the insured by ensuring they do not have to break the bank to meet up with payments.
Semi-annually or quarterly: In this mode of payment, insureds are required to pay a large sum that could have been paid monthly after six months.
Annually: This is the mode of payment in which you have to pay a large sum of money at the beginning of every new contract term, to keep your coverage active. Paying up front always guarantees that you get the lowest price.
One major benefit of paying your premiums yearly is that it helps you save costs. Most insurers offer discounts when the insured pay lump-sum amounts. However, a monthly payment is a good option and will be best for you if you know that parting with a lump-sum amount will put a huge financial strain on you and your loved ones. With monthly premium payments, you can spread the payment out over a year, and your insurance premiums will be part of your monthly budget alongside other things like mortgage payments, utilities, and phone bills.
If you purchase your health insurance coverage through an insurance agent or directly on the individual market, you would have to pay premiums monthly. However, if you receive healthcare coverage through your employer, you would have to pay a portion of the premium through payroll deductions while your employer pays up to 50% or more. Some insurers in New York may offer a discount if the premium is paid up-front.
You can decide to make monthly, quarterly, or upfront premium payments on your auto insurance in New York. Although paying upfront can be quite expensive, doing so will save you more money in the long run than monthly payments. This is because most insurers offer discounts for upfront payments.
There are two major ways to pay for your residential insurance in New York, and they include:
Paying through an escrow account
Paying directly to your insurance company
If you are financing your home through a mortgage lender, the lender allows you to add the cost of your insurance premium (through an escrow) to your monthly mortgage payment. Alternatively, you can pay your premiums directly to the insurance company based on their preference. For example, they can choose that you pay monthly, quarterly, or annually, depending on your policy type.
Most New York insurers do not offer a monthly premium payment option for commercial insurance. As a result, the business might have to pay for commercial insurance premiums as an annual lump sum. However, this does not mean that the business cannot find a way to make monthly payments. For instance, if the business cannot afford to pay the high upfront costs of coverage, the business can get a premium finance loan, which pays the policy in full and then allows the business to make monthly payments. Generally, the business has to pay two months of the annual premium as a deposit and pay the rest of the financed amount in the course of 10 months, including accrued interest. Talk with a licensed commercial insurance agent for more details.
How you pay your life insurance premiums largely depends on you and the policy you purchase. You can make your payments monthly, semi-annually, quarterly, or annually. If you have permanent life insurance, you can pay your premiums using your cash-value account. However, using your CV balance to pay your premiums requires that you make a lump-sum annual payment.
Generally, you have to pay for your disaster insurance premiums yearly - in a lump sum. However, If your coverage is paid through mortgage escrow, you are able to split the annual cost into more manageable monthly payments.
An insurance rate is the amount of money necessary to cover losses, expenses, and the cost of operating the insurance company. It is the amount or percentage of a sum of money an insurance company charges to render a specific amount of insurance coverage. Although it doesn’t pass for all, insurance rates are often paid monthly or yearly. The insurance rate is sometimes dependent on the insurance coverage. Most times, insurance rate is used interchangeably with premium, but they are not the same. An insurance rate is the cost of one unit of insurance over one year. In contrast, a premium is the insurance rate multiplied by the number of units the insured buys.
An insurance quote is an estimated cost of an insurance policy provided by the insurer to give the prospective insured an idea of what the coverage costs. Insureds are at liberty to get quotes from multiple insurers either online or through an insurance agent as a way to compare prices and coverage options. Factors like the level of risk a prospective insured represents, coverage amount, the pricing model of the specific insurer, and the benefits offered largely determine insurance quotes.
Discuss with a knowledgeable insurance agent licensed in New York who understands the complexities of the insurance market and can help you compare quotes with multiple insurance companies. They will help you get an affordable insurance policy to meet your current and future needs.