Renters who make less than $30,000 maintain renters insurance only twenty-five percent of the time, while those making over $75,000 have coverage sixty-nine percent of the time according to a study commissioned by Effective Coverage and performed by ORC International.
According to the Department Of Justice, those low income renters are also more likely to experience a crime, and it only makes matters worse that they do not have Renters Insurance.
The study also found that only thirty-one percent of renters living in subsidized housing maintain renters insurance, while renters living in market rate housing maintain renters insurance forty-seven percent of the time.
As a result, Effective Coverage is launching a nationwide renters insurance campaign to help educate renters who either have a lower income than the national average or live in a subsidized rental unit on the importance of renters insurance.
An earlier study showed encouraging results, noting that forty-four percent of renters in all demographics maintain renters insurance. That study was groundbreaking in the industry, showing more renters than ever before have renters insurance. It is important, however, to examine exactly who has coverage. In so doing, we can utilize that data to focus our educational resources where they’re most needed, in line with our core values.
We now know that those who are the least likely to have the financial resources to rebuild after a catastrophe are also the least likely to maintain renters insurance.
Renters Insurance By Household Income Level
The Effective Coverage study showed alarming trends of uninsured renters by income level. Only twenty-five percent of renters with household incomes less than $30,000 were insured versus those households making over $75,000 where sixty-nine percent of renters were insured, which is a nearly three-fold increase across the study. Compare those statistics to a report from the Brookings Institute that showed that the victimization rate for all personal crimes among individuals with family incomes of less than $15,000 was over three times the rate of individuals with family incomes of $75,000 or more.
In the $30,000 – $49,999 bracket, forty-four percent of renters had coverage, and in the $50,000 – $74,999 bracket the number of insured renters jumped to fifty-eight percent. Not only is income a significant predictor of likelihood of having renters insurance but it is also inversely correlated to the likelihood of an individual needing to make a renters insurance claim.
Effective Coverage also found that renters at the low end of the household income scale often cite the expense of a renters insurance policy as a reason for not getting coverage. However, at an average price of $187 per year we can clearly see that renters who have a limited amount of discretionary funds should still choose to purchase renters insurance. One of the Effective Coverage core values is education, and we believe it’s necessary to educate low income renters on the importance of renters insurance. Even when low income renters believe they do not have enough to protect they are putting themselves in danger of having nothing.
Renters Insurance Among Subsidized Renters
Subsidized housing takes various forms and has many sources of funding, largely from different levels of government. Generally speaking, unlike market rate apartments, owners of subsidized apartments are not able to implement a lease provision mandating that tenants purchase renters insurance. As a result, while the percentage of renters living in market rate apartments with renters insurance has increased over the past five years that number has not increased substantially in subsidized housing.
The inability to use a lease mandate, combined with a perception that renters insurance is expensive, makes this group harder to reach. The data show that only thirty-one percent of subsidized renters have renters insurance.
Those most in need of renters insurance are least likely to have it.
Why are residents of subsidized housing the most in need of renters insurance?
- Housing subsidized through project-based vouchers often has higher rates of property crime.
- Much of the qualified housing available is older housing stock, potentially with a higher risk of electrical fires and limited fire and theft protection.
- Much of the qualified housing available is located in high-density residential areas of urban environments. This setting comes with a commensurate increase in risk of loss.
- Residents of subsidized housing often have severely limited financial resources.
A combination of increased risk and decreased ability to absorb that risk puts renters in subsidized housing in a bad position. Even one small theft could take weeks or months to replace if the renter is forced to pay for that expense out of his own pocket. Perhaps the worst part is that the majority of subsidized renters use the program to better themselves and improve their future prospects, and losses causes significant setbacks in that process. Envision a single mother taking college classes online with the objective of receiving a nursing degree and bettering both herself and the world around her. While she’s at work, someone breaks in and steals her computer. Putting aside any work product that may have been on the computer, she now has no way to attend classes. A renters insurance policy would have been there to pay for her damages and the loss wouldn’t have been life-altering.
There will always be some people who have less than others, but Effective Coverage believes that there is a social mandate for insurance providers to ensure coverage is available to those who can least afford a loss without it. That the Effective Coverage team works tirelessly to advise renters and provide affordable renters insurance to all, starting with the ones most in need.
Summary And Conclusion
Forty-seven percent of market rate renters have renters insurance, which has increased over the past 5 years in part as a result of mandatory insurance requirements in their leases. However, only thirty-one percent of subsidized renters have coverage and twenty-five percent of those with a household income less than $30,000 have renters insurance. Those who most need renters insurance are least likely to have it. Subsidized renters frequently face additional risk because of their living situations, and they’re also generally unable to recover from a loss, even a small one. More work needs to be done to educate subsidized and low income renters about the risks they face, the availability of coverage at low-cost, and the benefits of that coverage in the event of a catastrophe.
Effective Coverage works to provide subsidized housing renters insurance and low income renters insurance, as well as renters insurance for market rate renters, and to make the process of buying coverage quick and easy. Just call (800)892-4308 or click to get covered - whether you need renters insurance quotes online or coverage anywhere else!
Effective Coverage offers the nation's only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.
This ORC International study presents the findings of a survey conducted among a sample of 2,024 adults comprising 1,008 men and 1,016 women 18 years of age and older. The online omnibus study is conducted twice a week among a demographically representative U.S. sample of 1,000 adults 18 years of age and older. This survey was live on March 2-4 & 9-11, 2015.