Research Debunks the Myths about Renters Insurance
Should we or shouldn’t we? When it comes to mandating renters insurance, that’s the question. A popular topic among multifamily professionals, most property management companies do require it. However, a lack of an industry-wide mandate lies partly in the belief that forcing renters insurance will cause an increase in the total cost of leasing, which will lower demand and impact pricing strength, occupancy and revenue.
Whew. That’s a lot. Let’s back up a second and consider the apartment market.
The Truth about Renters Insurance
Apartment living has become a lifestyle over the past 10 years. More than 19 million Americans reside in rental housing today, and an additional 4 million new renter households are expected in the next 10 years. This influx of people equals dollars…but it also means additional risk. And to mitigate this risk, many communities mandate renters insurance.
Still, a 2015 Insurance Information Institute poll showed that only 40 percent of renters had a renters insurance policy. Why the disparity? We’ve found that renters believe:
1. Their household contents are covered under the property’s insurance policy.
Truth: In reality, it typically covers only the property buildings and infrastructure.
2. They do not have sufficient value to their belongings to warrant an insurance policy.
Truth: Surprise! Companies like USAA estimate the average renter has $20,000 in possessions. Allstate says $30,000!
3. They cannot afford the insurance.
Truth: It’s cheaper than car insurance. For instance, according to Insure.com’s 2016 state-by-state comparison of auto insurance premiums, the median annual cost was over $1,300, or more $100 per month.
So, we asked ourselves. Does renters insurance impact revenue generation? We conducted a study to test the theory. Download the full results here.
The full results of the findings, along with the methodology and statistical hypothesis used in the study, prove valuable to those considering implementing a mandatory renters insurance program to mitigate risk and exposure.