The space is covered — but not the stuff

Published 2:45 pm Saturday, December 26, 2009

Insurance — namely health insurance — is discussed so often these days that the topic is kind of hard to ignore.

But there is a type of insurance applicable to roughly 87 million Americans that goes largely unnoticed and unused — renters insurance.

National statistics put the percentage of renters without coverage at around 60 percent, meaning about 50 million people don’t have it.

By comparison, despite all the on-going debate over who needs coverage and how to deliver it, 85 percent of Americans have health insurance, according to statistics released by the U.S. Census Bureau in September.

Other “big name” insurances also cover a greater percentage of people — about 96 percent of Americans have homeowners insurance, though it is a requirement of having a home loan, which certainly boosts that number.

Auto insurance, like health insurance, reaches about 85 percent of eligible people, though many states require such coverage before someone gets behind the wheel.

So, beyond not being mandatory like home and auto insurance, why does renters insurance lag behind?

Landlords and insurance agents typically cite several main factors — renters with low budgets worried about costs, a misperception that a landlord’s home insurance covers everything and just a general lack of education about renters insurance.

In Austin, the story is pretty much the same — renters insurance often gets ignored.

What exactly is renters insurance?

While many renters know — and expect — that their landlords have insurance on their homes, they may not know that their belongings within the property are not covered.

That means in case of a fire, like the one that hit Austin’s Main Street in January, flood or other damaging event, destroyed TVs, laptops, clothes and other items are the responsibility of a tenant.

And the cost to replace such items is often much higher than the price tag on renters insurance, Austin agent Edward Lee said.

Lee, who works with American Family Insurance, said most people can get renters insurance for between $12 and $18 a month. Many can also pair it with auto insurance, for example, and save money on existing coverage.

“I’ve actually seen some people where their total (insurance cost) is less,” Lee said.

The agent said the cost is worth it, not only for the coverage on personal belongings but also the liability coverage, which often gets overlooked.

But that doesn’t necessarily mean renters are chomping at the bit when they talk to Lee.

He said customers rarely come into his office asking about renters insurance. Instead, Lee said he often brings up the subject.

However, that approach seems to work for Lee — he said he believes more people using his agency have renters insurance than the national average.

“Because we talk about it all the time,” Lee said.

Getting the information out there is half the battle, the agent said. Once customers learn about the benefits of renters insurance — and the potentially low cost — they often sign up. But it’s misinformation, or lack of information, that slows the process down, Lee said.

“If they’re not aware of it, they kind of blow it off,” he said.

And why do so few people have it?

Mike Carstens, a local landlord and president of the Austin Area Landlord Association, said he can’t remember one person out of the last 25 to 30 who’ve signed a lease with him that have gotten renters insurance.

He said local renters are, for the most part, young people or immigrants who may not be thinking about insurance — or may not have the budgets for it.

Carstens said he goes through leases with new tenants and discusses what’s covered and what’s not. He often brings up renters insurance while discussing the latter.

“They know they’re not being covered,” he said.

Though some landlords require tenants to purchase renters insurance, Carstens said he is not in favor of legislation that would make that a requirement at all rental units.

Instead, he thinks people should be taught more about insurance — including renters insurance — while they’re still in high school.

“Education is power,” Carstens said. “It’s the people who don’t understand that get burned.”

Karen Mattson, a family housing specialist at the Austin Housing and Redevelopment Authority, cited many of the same reasons as Carstens for such low renters insurance numbers.

In addition, she said many people have an, “Oh, that’ll never happen to me” attitude.

But disasters certainly can happen and they can affect renters — the Main Street fire displaced several upper-level tenants.

“I think it’s a very good idea for people to have (renters insurance),” Mattson said.

Bob Ingersoll is one Austin resident with the coverage.

Ingersoll, 58, said he got renters insurance for his First Avenue Southwest basement apartment in April after thinking about the potential damage a burst pipe could cause.

He also had heard that the cost of replacing personal items had increased, which prompted him to contact his agent.

Ingersoll said he pays about $100 a year for coverage, which is actually more like $50 or $75 after accounting for an auto insurance discount he received.

“I’m getting more out of my money and the security of knowing I’m covered,” he said.

That security was especially gratifying for Ingersoll when a tornado bore down on Austin in June.

“That’s when (my landlord) was saying, ‘I hope you guys have renters insurance,’” Ingersoll said. “I said ‘I do.’ ”