Pub. 5 2020 Issue 5

5 ISSUE 5 2020 this issue. 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 the results of a study about the impact of renters insur- ance on revenue generation. The study involved benchmarking multiple management companies that implemented mandatory renters insur- ance in 2008. Those conducting the study benchmarked the companies’ cu- mulative indexed revenue performance against their markets, submarkets and ZIP codes. What they found was that mandatory renters insurance did not impede performance. Communities that mandated rental insurance beat the market index and the ZIP code index but not the submarket index. However, the difference between the communi- ties and the indexes was not significant regardless of the result. If renters insurance is cheap enough that it doesn’t impact whether someone will continue to rent from you, what does that mean in terms of implementing a mandated insurance program? Most renters are probably interested in bundling their coverage and their other insurance coverage to get a better rate. Doing so presents two problems: • How does the renter know bun- dled coverage is adequate? When insurance products are bundled, the chance of someone needing to file a claim is bigger with multiple policies than it would be with a single policy, which means policies are subject to cancellations and premium hikes. • How do you know whether someone is maintaining renters insurance? Insurance companies are perfectly capable of dropping someone’s coverage and have no requirement to notify the proper- ty management company of that change in status. If you are going to mandate renters insurance, it is probably better to have renters do so with a separate policy. Be sure to select a company that will tell you when a policy lapses, is about to expire or has been cancelled. It is also possible for providers to send renters automated email reminders when they move in and when they are not covered anymore. What should renters insurance cover? • Theft coverage is different from burglary coverage. If someone is robbed, it’s necessary to prove forced entry or some other kind of break-in before burglary coverage will kick on. For theft coverage, a renter just has to file a police report about the theft and then provide the insurance company with a copy of the report. As a result, renters will do better with theft coverage than burglary coverage. • Coverage should be for more than just an apartment. It should also cover anything in a car, garage or storage unit, as well as for losses that occur while traveling. • Since a renter might have multi- ple roommates and the occasional guest, rental insurance should cover these people as well. • Immediate qualification and same- day coverage are also important. If a renter has to wait for a background or credit check, that is a period of vulnerability. Same-day coverage is important because renters should Encourage renters to find out what the insurance policy promises in the event of apartment damage during an emergency. The additional living expenses (ALE) part of an insurance policy should provide a renter with money to pay for temporary lodging or utility costs if an apartment is damaged enough that the renter has to live somewhere else for a while until repairs have been made and the apartment is habitable again. Continued on page 6