Pub. 1 2016 Issue 3

22 www.ctaahq.org 䌀吀䄀䄀 吀䠀䔀䌀伀一一䔀䌀吀䤀䌀唀吀䄀倀䄀刀吀䴀䔀一吀䄀匀匀伀䌀䤀䄀吀䤀伀一  O ne of themost important business decisions you will make in the propertymanagement business is the rent you charge. It consists of two parts: determining whether people can a ord the rent and also whether they think it is a fair trade for what you are giving them. Some property management companies are reluctant to mandate renters insurance for just that reason. ey don’t want to increase the total cost of leasing. Setting the total cost too high, after all, can lower demand if people then decide to go buy a place to live instead of renting it. If too many people make the decision to buy instead of rent, pricing strength weakens right along with occupancy and revenue. DO THE FACTS SUPPORT THIS ARGUMENT? Consider the following: • During the last ten years, renting an apartment has de nitely become a lifestyle choice, one that has been made by the 19 million people in the U.S. who currently live in one. During the next ten years, experts expect the market to grow by an additional four million new rental households. • ORC International conducted an In- surance Information Institution poll in 2015. According to the poll, 95 percent of homeowners have home- owners insurance, but only 40 percent of renters had renters insurance. An increased number of renters results in increased revenue for the property management business, but it also means increased risk. Why is it that homeown- ers are opting for insurance to mitigate that risk and renters are not? Common fallacies include: • A belief that property insurance policies cover household contents. Property insurance actually covers only the buildings and infrastruc- ture, not a person’s possessions. • inking that personal belongings are not worth much and are there- fore not worth insuring. USAA estimates that the average renter actually owns possessions worth $20,000. Allstate puts the average higher, at $30,000. • The belief that rental insurance is too expensive. It is certainly true that health insurance and car insurance are both expensive, but renters insurance is surprisingly af- fordable. e median annual cost of car insurance, according to a state- by-state comparison performed by Insure.com, is slightly more than $1,300. at puts monthly premi- ums at slightly more than $108 per month. Renters insurance, on the other hand, is approximately $12 a month or $144 a year, assuming someone buys a policy for $30,000 of property coverage and $100,000 of liability coverage. RealPage, Inc., a company that was founded in 1998 and that provides prop- erty management software solutions for markets within the rental housing industries, decided to nd out. Richard Hughes, who is the head of Data Science and Senior Vice President of Strategic Revenue Systems, wrote a white paper for RealPage, Inc. in which he summarized SHOULD RENTERS INSURANCE BE MANDATORY?