Who is more likely to have renters’ insurance – the recent college grad hanging the diploma on the wall, or the penthouse leaser aligning the Picassos?
According to a new national survey, both are likely to be uninsured.
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Released last month by Trusted Choice, a company that represents insurance and financial service firms, the survey says that people in nearly 25 million of the 35 million homes rented in the United States last year went without renters’ insurance.
The uninsured renters, who make up more than 70 percent of the market, include people that think the coverage is too expensive (26 percent), people unaware they needed it (17 percent), and some who had never even heard of it (8 percent).
The uninsured also include renters from all walks of life, including college students, pet owners and entrepreneurs operating a business out of a rented home, according to the survey.
The survey results come as no surprise to Roger Messier, president of Butler & Messier Insurance in Pawtucket. In his 52 years in the business, he said, he has seen very few people take advantage of renters’ insurance.
“It’s a very broad, nice package,” he said. “But nobody buys it. … Fifty years ago they weren’t buying it more than they are today.”
Messier said he doesn’t understand why renters don’t purchase policies, which can be obtained for as little as a few hundred dollars per year or less. The policies cover personal property that could be damaged in a fire or natural disaster, as well as any liability that the renter can incur from an injury within the rented property.
Dennis Charland, executive director of Independent Insurance Agents of Rhode Island, said that many renters assume that they’re covered under the landlord’s homeowner’s insurance. In reality, he said, the owner’s insurance only covers the structure of the home.
So in the event of a disaster, when computers and furniture are destroyed, the renter has no means of compensation.
“It’s very important coverage that people need to have to protect themselves,” Charland said. “If they don’t have that coverage, when a loss happens they are really going to feel it.”
There are two types of renters’ insurance: cash value and replacement costs. Cash value coverage takes into account the age and condition of items when they are lost and reimburses the policyholder for the value of the depreciated item. Replacement cost
plans pay the policyholder the cost of buying an item of similar kind or quality today.
Despite the slightly higher cost, Consumer Federation of America Insurance Director J. Robert Hunter recommends that renters get replacement cost coverage. That way, when a disaster happens, the person will be able to get a similar item, he said. “You won’t get a fancier couch, but you’ll get one as a good as the one you had.”
Hunter said he believes the Trusted Choice poll underestimated how many renters have insurance. In his own experience at the Consumer Federation and as an insurance commissioner, he said, about half of renters purchased policies.
However, Hunter added, recent college graduates and college students renting homes are less likely to have the insurance than other demographics. And that’s fine, he said.
“People just starting out don’t need to protect themselves,” Hunter said. “At some point they do.”
