Renter’s Insurance Can Save Owners Nearly 80% of Resident-Caused Damage Expenditures Survey underscores the importance of reducing risk through a renter’s insurance solution
RISMEDIA, July 12, 2006—According to the findings of a new national survey commissioned by LeasingDesk Insurance Services, multifamily property owners who enforce renter’s insurance as a condition of residency effectively reduce financial expenditures related to resident-caused damage by nearly 80 percent (79%). This finding translates to a savings of $4.29 per unit for property owners who have successfully reduced the risks and financial implications of resident-caused damage by implementing a renter’s insurance program at the property.
The comprehensive survey sought to provide descriptive research among both renter’s insurance users and non-users regarding program utilization, perceptions and related financial information in order to evaluate the impact of such programs in the multifamily industry.
Although more than half (55.32%) of all the respondents track the number of resident caused damages that fall below the property’s insurance deductible and nearly half (43%) cite an increase in insurance rates between 2004 and 2005, the prevalence of risk management programs was surprisingly low among multifamily owners and managers.
To accurately document the study’s findings, the survey population was broken down into three sub-categories; “Property Owners who Offer Renter’s Insurance,” “Property Owners who Require Renter’s Insurance,” and “Property Owners who Enforce Renter’s Insurance.” Each of these independent subcategories offered insight into the prevalence of risk management solutions at individual owner’s properties and the future plans to implement such a program. For these subcategories, the data indicate:
Less than one-third (30%) of “Property Owners who Offer Renter’s Insurance,” provide this risk management solution at all of the properties in their portfolio; and 45 percent reported that no insurance solution was offered at all.
Only a quarter (25%) of “Property Owners who Require Renter’s Insurance,” cited that renter’s insurance is required at all of their portfolio properties as a condition of residency; and nearly 15 percent said that insurance is required at some of their properties.
For those “Property Owners who Enforce Renter’s Insurance” as a condition of residency at some or all of their properties, more than half (58%) enforce coverage at all times.
More than two-thirds (67%) of those respondents who do not currently offer any type of renter’s insurance solution were considering such a program at the time of the study.
“The multifamily industry is the only industry that does not require renters to accept liability for damages they may cause. By not protecting themselves against resident caused damages, owners are exposing themselves to unnecessary risk,” said Dirk Wakeham, President and CEO of LeasingDesk Insurance. “The findings of this survey underscore the importance for owners to implement a renter’s insurance program to effectively reduce their risk and simultaneously increase the property’s profitability by reducing expenses related to resident caused claims.”
Perceptions
As part of the survey, respondents were also asked about their perceptions regarding renter’s insurance programs and its effects. A five point rating system was used to gauge their responses, with a score of “1” representing “disagree,” and a “5” representing “agree.” According to the findings, the vast majority of respondents agreed (4.31) that the primary reason a renter’s insurance program was instituted was to decrease the company’s exposure/risk.
An equal number of respondents agreed and disagreed with the belief that a program of this nature would increase the company’s bottom line. However, even though revenue enhancement was not a uniform driver of the decision making process, half (50%) of respondents whose companies offer renter’s insurance reported the program has had a moderately-to-very positive effect on their bottom line. In fact, the figure is higher for those respondents that offer, require and enforce a program (55%). The data suggests that although generating revenue was not a condition of implementation, this type of risk transfer solution can actually increase a company’s profitability.
The study also uncovered the belief among those owners who have not implemented a full participation renter’s insurance program that administering this type of risk management solution would be cumbersome and time consuming. The results however indicate that more than three quarters (77%) of owners who have implemented some form of a renter’s insurance solution reported the program was “easy” or posed “manageable challenges.” Additionally, nearly half (46.5%) of owners who offer renter’s insurance would “absolutely” recommend a renter’s insurance program, and that percentage increases to 82 percent among owner’s who not only offer, but also require and enforce coverage.
For more information about LeasingDesk’s customized insurance programs, visit www.leasingdesk.com or contact (888) 484-7132 or sales@leasingdesk.com.
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