There are more than 43 million renters in the United States, with over half of those being under the age of 30, according to the National Multifamily Housing Council (NMHC). Millennials, along with older members of Generation Z, are choosing to rent instead of buying condos or houses for a number of reasons, including affordability, flexibility and a greater focus on careers and education. As rentals and multi-family properties continue to be a growing part of society, brokers and agents have an opportunity to tap into the emerging market of renters’ insurance.
“More renters translates into bigger liabilities for landlords, particularly when the renter is a young person generally focused more on their careers, social lives and fun with less of a focus on the condition of their apartments,” said Nelson Townes III, vice president of national sales at QBE North America.
In fact, less than half of tenants purchase renters’ insurance. Townes says renters are often under the impression that their landlord’s policy covers them and their belongings and having their own coverage isn’t necessary, which simply isn’t true. In addition to that, those that do purchase coverage often underestimate the value of their possessions, which results in insufficient cover. Personal items like big screen TVs, a laptop, tablet, plus clothes and other items add up quickly, and need to be taken into consideration when looking at coverage options.
Brokers and agents need to work with property managers and owners to educate renters about the importance and benefits of renters’ insurance. These products protect not only personal property, but also personal liability if someone is injured.
“There is a fine line in what property managers can say because leasing managers aren’t licenced to sell insurance or discuss coverages, but they can definitely promote these products with informational material in the leasing office or online,” said Townes. “A focus on the benefits is important.”
More property owners are requiring tenants to get renters’ insurance as part of the lease agreement. Brokers and agents should remind their landlord clients that they also benefit from tenants purchasing renters’ insurance, because it acts as a stopgap to prevent nuisance claims.
“For property managers and owners who pay small damage claims from operating budgets, those add up,” Townes said. “Renters’ insurance provides the benefit of covering those costs when a resident causes property damage or loss.”
There are other scenarios in which coverage comes into play, he added, such as for large losses like a multi-unit fire. Renters’ insurance claims can be activated so the property manager does not have to file a claim on the owner’s commercial policy, which may include a high deductible, as property repairs are paid for through the renter’s policy up to the policy’s liability limits.
In order to garner more interest from renters, brokers and agents can provide information about some of the endorsements that can be of huge benefit. QBE offers an electronic protection program, for example. This endorsement is affordable and can cost an average of $17 to $20 per year (assuming a $250 deductible). If a renter trips while carrying a new laptop and it is no longer functional, the renter would receive a check for the cost of the laptop, minus the deductible. The coverage goes beyond a manufacturer’s warranty, can circumvent a buyer’s lack of coverage at point of sale, and often covers more hazards and exposures than a typical warranty.
In current times, as most Americans spend more time at home due to shelter-in-place orders and work-from-home shifts, these endorsements may be of added value.
“We’ve seen a lot of people purchasing their own office equipment in order to have a more functional space for working from home, and once these items aren’t being reimbursed by the company, the electronic protection policy will cover any damages on these items,” said Townes. The policy also covers exercise equipment, such as treadmills.
In addition, QBE continues to evolve its systems and processes as technology allows.
“We understand that millennial renters, especially, prefer to work online,” said Townes. “So, if there’s a claim, they can file it online, communicate with adjusters via text and submit pictures of damages that way as well, making the process efficient and hassle-free.”