The Torndao in Oklahoma last week may shine a light on this subject. Add to that the fact that over the past three years, the east coast alone was hit with two hurricanes and a series of as powerful winter storms. And yet, it is surprising to learn that the majority of renters are probably not carrying a current renter’s insurance policy or have one at all. After having a building in which I was part owner burn down – I am sort of a fanatic about ensuring tenants know about the cost and advantages of renters insurance.
A 2012 Insurance Information Institute (III) poll conducted by ORC International found that only 31 percent of renters had renters insurance. That’s a surprising number when compared to the findings from the National Multi Housing Council’s 2012 Apartment Cost Risk Survey that states 84 percent of apartment companies say they require residents to buy renter’s insurance.
Why is that? What is causing renter’s to pass on such a valuable way to protect not only their belongings but their bank accounts?
A recent phone survey of 1,004 U.S. adults by Princeton Survey Research Associates International for InsuranceQuotes.com found that the problem of widespread lack of coverage is caused, in part, by myths and misconceptions about renter’s insurance.
Here are some of the more common reasons renters gave for not getting insurance, according to the survey, and the reality of those misconceptions so you can better educate your renters and staff.
Myth #1: Renter’s Insurance is too Expensive
Myth: Residents often cite cost as a big reason for failing to buy insurance. In the survey, 60 percent of respondents guessed that renter’s insurance costs $250 a year, while 21 percent estimated it costs $1,000 or more.
Reality: Renters often don’t realize how affordable renter’s insurance actually is. The average policy costs $185 a year, or $15 a month, according to the National Association of Insurance Commissioners.
Requiring residents to pay what amounts to the cost of a single movie ticket on a Friday night for a renter’s insurance policy is probably worth it in the long run.
Myth #2: The Property Owner has Renter’s Insurance
Myth: Residents often believe they don’t need insurance because their landlord or apartment community has a policy that includes coverage on their belongings.
Reality: While it is true that most owners have building insurance , the policy covers only the structure (for example the walls, carpets, and cabinets) and does not cover a tenant’s possessions. Also, it does not offer liability coverage in case someone gets hurt in a resident’s home. Another thing to think about is that if an uninsured resident causes damage to the structure – for example causing a fire when grilling on the deck – the apartment community’s insurance company can seek compensation. The liability component of a renter’s insurance would cover the resident.
Myth #3: I Don’t Own Enough for Property Coverage
Myth: Many people underestimate the value of what they own. Additionally, the growing popularity of “asset-light” living, especially among 20-something, could be fuelling this myth.
The Internet trend of asset-light living is the use of the cloud and mobile applications to store and stream things like music and documents, freeing up physical space that might previously have been filled by CD’s, books, televisions, and paper. If the majority of a renter’s possessions is digital, they may think there isn’t a need for property coverage.
Reality: Even the most basic household contents – dishes, bedding, clothing, computers, etc. – can cost thousands of dollars to replace. Additionally, renter’s insurance protects against much more than just loss of possessions; it can reimburse for temporary lodging if the apartment is damaged by fire or natural disaster.
Renters Insurance: You Can’t Afford Not to Have It
It takes just one event, whether theft, fire, accident, or natural disaster, to show the true value of owning a renter’s insurance policy. And it’s that value property managers must convey to potential and current residents when asking them to spend an additional $15 a month to live at that community.
You’re probably familiar with sales and marketing tactic of F.U.D. (Fear, Uncertainty, and Doubt). When it comes to renter’s insurance, it’s more like F.U.N.D. (Fire, Uncertainty, and Natural Disasters).
If you’re an owner with a tenant who doesn’t have insurance make sure you get a disclaimer from them acknowledging they know the risks and advantages.