Home > Insurance Blog > The renters insurance rundown: what most renters are missing out on
Despite the growing tenant base in the United States, only a minority of renters maintain renters insurance. This indicates an opportunity for property insurers to access an untapped customer base. In order to captivate a tenant’s attention, insurers must understand why tenants do not carry this insurance and then communicate the benefits of this coverage. Most notably, tenants need to understand the importance of coverage for personal contents, temporary housing, and liability. In this article, we review the components of landlord insurance compared to renters insurance as well as recent trends in hopes that insurers can better understand how to convince tenants of their need for insurance to protect their property and assets.
Many tenants believe that since they do not own the property, insurance is not necessary for them. However, this is not the case. Below is a list of items covered and not covered for a rental unit under a landlord’s property insurance policy.
Renters insurance remains a low-cost product that adds significant protection for tenants. In fact, the average renter’s insurance premium is only $180 per year or $15 per month. A renter’s insurance policy helps bridge the gap to make sure tenants have adequate property and liability coverage for those items not covered under a landlord’s policy. Below is a list of four items covered under most renter’s insurance policies.
The additional living expenses coverage represents one of the most important components of renter’s insurance policy. As mentioned above, this coverage helps tenants pay for temporary housing in the event that their rental unit is not habitable following a covered peril. In the event of a property loss, the Landlord is responsible for repairing the damage to ensure the rental unit is safe and habitable. The Landlord is not required to provide temporary housing for the tenant. This is why the additional living expenses coverage is so important. An uninsured tenant will need to arrange and pay for their own temporary housing, while an insured tenant will work with their insurer’s temporary housing company to quickly arrange temporary housing following a loss. Temporary housing companies such as Sedgwick’s temporary housing division, provide quality temporary housing services for people displaced from their home.
Despite the growing number of renters in the US, only 37% of renters have insurance. Several trends influence the renter’s insurance market; therefore, it is important for insurers to understand these factors.
The Joint Center for Housing Studies of Harvard University recently published a report “America’s Rental Housing 2020” source (January 2020), which identified some trends that directly impact the renters insurance market. Below are two examples.
Increase in the number of renter households – the total number of renters in the US increased significantly over the past 15 years. This created a large number of tenants, the majority of which do not have renters insurance. This trend created a significant opportunity for insurers.
Increase in the number of renters among high-income households – the below chart illustrates the recent growth in the number of high-income renters. While the total number of renters has stabilized in recent years, the number of high-income renters increased significantly. Insurers must pay attention to this trend. High-income earners can afford the additional cost of renters insurance more than lower-income renters can. Furthermore, high-income earners typically have more personal property that needs insurance.
These trends should energize insurers to take notice of the opportunity to serve new customers and help uninsured tenants understand how renters insurance can help secure their financial future.
Filed Under: Insurance Claims, Rental Property Management, Temporary Housing | Tagged With: Home Insurance, Renters Insurance