Natural disasters have a way of shining a light on the necessity and value of renter’s insurance. According to the Insurance Information Institute, insured losses due to natural disasters in the United States in the first half of 2015 totaled $12.6 billion, well above the $11.2 billion average in the first halves of 2000 to 2014. And yet, there are many who are renters are skeptical and choose to opt out of renters insurance, deciding to assume risks possible.
A recent survey from NMHC mentions the U.S. apartment market has reached approximately 38 million renters. A 2014 Insurance Information Institute (III) poll conducted by ORC International found that only 37 percent of renters had renters insurance, a surprising number to take in.
With this in mind, it’s hard to understand why residents would opt out of insurance coverage. Why are renters passing on a way to safeguard belongings and personal property? Based on misconceptions, residents can forego renters insurance for the wrong reasons. Below we’ve debunked some of the common ones:
Myth #1: Renters Insurance is Too Costly
Residents often cite cost as a big reason for failing to purchase insurance coverage. It’s understandable for apartment residents to have costs concerns; the Insurance Information Institute reported 47.6 percent of renters nationwide spent at least 30 percent of their household income on rent and utilities in 2013. In the case of purchasing renters insurance, residents can be wrong about the big price tag.
“The average renters insurance policy costs $15-$30 per month, far less expensive than replacing personal possessions or being liable for an accident,” mentions Jay Stoltz, Director of Market Development for LeasingDesk in one recent article.
Myth #2: The Apartment Property has Renters Insurance
Residents often believe they don’t need insurance because their landlord or apartment community has a policy that includes coverage on their belongings. While it is true that an apartment community has insurance, the policy covers the structure itself, not a resident’s personal possessions inside it.
Also, it does not offer liability coverage in case an uninsured person is hurt in a resident’s home. If an uninsured resident causes damage to the structure – for example causing a fire when grilling on the deck – the property’s insurance company can seek compensation for damages. The liability component of a renter’s insurance would cover the resident.
Myth #3: I Don’t Own Enough for Property Coverage
In the words of Joni Mitchell, “you don’t know what you’ve got ‘till it’s gone.”
It’s not uncommon for people undervalue the possessions they own. Even the most basic household contents – dishes, bedding, clothing, computers, etc. – can cost upwards of thousands of dollars to replace. Additionally, renters insurance protects against much more than loss of possessions. In the chance the apartment structure is damaged by natural disaster or fire, it can be reimbursed for temporary lodging if needed.
Insurance Information Institute offers a free online service to help residents take inventory of belongings.
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 renters insurance policy. With the right education, renters can understand affordability of renter’s insurance, especially in terms of the consequences of not having coverage.
How are you educating your future and current residents to the value of owning a renters insurance policy?