Not all Renters Insurance Policies are Created Equally
Renters insurance policies come in varying sizes and shapes, and can be bundled with other coverages in an attempt to provide a better rate. But lumping renters insurance with auto policies and/or other types of coverage may cost residents more in the long run, or even force inadvertent cancellations. That doesn’t bode well for property managers who are tasked with maintaining continuity of insured residents.
Jay Stoltz, Director of Market Development for LeasingDesk Insurance, says renters need to examine bundled coverages closely to determine if a policy is providing adequate coverage. Diverse insurance products, when bundled, can be subject to premium hikes or cancellations, based on claims filed.
Locking in with a separate renters insurance policy, like LeasingDesk’s eRenterPlan, will minimize the risk of higher premiums or cancellation associated with claims for bundled coverage, says Stoltz.
Apartments benefit when residents maintain renters insurance
Property managers are faced with the challenge of residents maintaining renters insurance even though lease clauses mandate coverage. Residents may be dropped from coverage unbeknown to the apartment provider and become a liability to the property management company and/or owner.
According to a FEMA Fire Report, each year an estimated 106,000 multifamily residential building fires cause $1.3 billion in property loss. Eighty-four percent of property management companies require their residents to have renters insurance to minimize exposure.
An uninsured resident who suffers costly and common damages, such as water, smoke, fire, and explosion can force apartments to file claims against their commercial insurance policy. Such claims can drive up premium rates for the property.
An industry-specific renter’s insurance plan covers the bases
There are a number of advantages that an industry-specific renters insurance plan offers renters and property managers over bundled protection or in general, Stoltz says. LeasingDesk has long provided programs developed by multifamily professionals and insurance experts who understand the unique needs of the industry.
“It’s an important consideration to work with a preferred provider that focuses on multifamily,” he said. “This is a very industry-specific and customer-focused plan geared toward multifamily that reduces the potential headaches created by other plans.”
Stoltz notes six other things that renters and property management companies should consider when choosing and recommending renters insurance coverage:
Theft coverage versus burglary coverage
Renters should consider how theft and burglary coverages are handled by the insurance provider. Burglary coverage is limited in scope and the insured has to prove forced entry or some type of break-in to get compensated. With theft coverage, the resident is required to provide proof of theft by filing a police report and providing the document. A policy that offers full theft coverage, not just burglary, is advantageous to the renter.
Also, Stoltz said it’s important for residents to seek a policy that has coverage away from the unit, not just limited to the apartment. “It should include the items in your car, garage, storage unit or even if when traveling.”
Guest and roommate insurance
A policy that covers damage by visitors or has the capability to ensure multiple occupants who share the same apartment is a plus for the property management company and residents, Stoltz says. eRenterPlan covers up to five unrelated residents who share an apartment.
Same-day coverage is important when residents are taking possession of an apartment and may have forgotten to set up a policy in advance. “Typically, you’re moving big boxes and other items and you might have an accident,” Stoltz said. “It’s always nice to know you have same-day coverage, and that’s a real convenience and benefit for the resident and the management company.”
Also, policies that feature immediate qualification, without the waiting for background or credit checks, enable coverage to begin quicker and protect residents in a pinch.
Deductible levels and payment options
Ideally, a renters insurance policy should have deductible options on personal contents and multiple means of payment, Stoltz says. eRenterPlan offers deductibles of $250, $500 and $1,000, and allows residents to pay monthly, quarterly, semi-annually or annually. Residents who are unsure how long they will be staying at a community benefit from having multiple payment options.
Additional living expenses
Residents should understand how much the additional living expenses (ALE) portion of the renters insurance plan covers. In the event of apartment damage, a policy should assist residents in covering a portion of costs associated with emergencies. Additional living expenses can include temporary lodging or utility costs.
Dog bites and optional endorsements
Also, Stoltz said pet damage endorsements are becoming popular as more and more apartments become pet-friendly. A policy that isn’t restricted to breeds is beneficial.
“With so many residents having pets these days, it’s a very smart endorsement to purchase,” he said. “It’s an option in most cases, but look for a policy that covers a specific amount above and beyond pet deposits. That might be good money spent if you have a dog that urinates on the carpet or chews the baseboards.”
Other optional endorsements that cover contents up to $50,000 and provide liability coverage for damage caused by water (overflowed bathtubs/toilets, etc.) help set renter’s insurance policies apart.
eRenterPlan and RenterProtection are offered by LeasingDesk Insurance Services, a licensed insurance agency operated by Multifamily Internet Ventures, LLC. CA Agency license # OD12126. This article is only a general description of policy coverage and not a statement of contract. Coverage is subject to the terms, provisions, exclusions, and conditions in the policy itself and in any endorsements.)
 Multifamily Residential Building Fires, FEMA Topical Fire Report Series, Volume 16, Issue 5 / July 2015. http://www.usfa.fema.gov/downloads/pdf/statistics/v16i5.pdf
2 2012 NMHC Apartment Cost of Risk Survey