InsurTech disruptors like Lemonade are working hard to poach personal lines customers from independent agents.
Because it’s inexpensive and relatively straightforward, renters insurance is particularly ripe for the picking—but not if you can prove your worth by helping your prospects and clients understand the coverage.
Here are four common misconceptions consumers have about renters insurance, and tips on how you can set the record straight.
1) If I have a loss, my landlord will cover it. “A lot of renters think, ‘I pay rent; therefore, I don’t need insurance,’” says Eric Narcisco, founder of Effective Coverage, a digital insurance firm focused on renters insurance. This is an easy myth to bust: In almost all cases, it’s simply not true.
2) I don’t have enough to insure. “A lot of renters think, ‘I just don’t have that much stuff—what’s the point of getting insurance?” Narcisco points out. “That’s obviously a fallacy.”
Narcisco knows firsthand—his impetus for launching Effective Coverage was a fire back in 2002, which happened when he was living in an apartment in New Jersey. “I did not have insurance, and I lost everything,” he recalls. “I found myself living in the model apartment for a couple months, fighting with the landlord. It was a mess.”
And beyond simply covering contents, a renters policy also covers personal liability insurance—something “that is often overlooked,” says Teresa Scharn, assistant vice president, personal lines product development at Nationwide. “This may be even more important for older renters who have amassed greater wealth which needs to be protected.”
3) Every renters policy is the same. By and large, most renters policies use traditional ISO HO-4 forms. But Narcisco says to watch out for minor nuances between policies—for example, “a policy by a well-known carrier may have a sublimit of $2,500 for firearms, and that same sublimit in a policy nobody’s ever heard of might be $500.”
In addition to the coverage itself, pay attention to the services surrounding the policy. “The level of service the customer can expect is important,” Scharn points out, citing valuable options like paperless billing and EFT.
4) It’s at least as expensive as auto insurance. Narcisco is consistently amazed at how often someone calls in to buy a renters policy and, when they hear the price is $125 for the year, respond, “OK, $125 a month—how do I get started?”
Many consumers are baffled by a quote that low, but the typical renters policy costs $10-20 a month, or $120-240 a year. “Even if one company is 10% higher, that may only be $2 more a month to cover their personal assets,” Scharn says.
And in a line InsurTech disruptors are eyeing, that’s great news—renters insurance is already so inexpensive that customers are unlikely to shop around based on price. “Think of how different that is than expectations of almost anything,” Narcisco points out. “How often do you go into a transaction having no idea what the cost will be, and end up pleasantly surprised? Maybe on your first Uber ride, but not much else.”
To streamline renters insurance at your agency, Narcisco recommends focusing on one carrier in your local market that you know offers a good price on renters and going from there: “You don’t have to put it through your comparative rater, you don’t have to quote it out with three different carriers and beg for the auto as well—it’s just, ‘Here’s our renters carrier, it’s $10, $12, $13 a month.’ You issue those policies. You help educate parents.”
Renters is a rare line of insurance where your job as an agent is “to provide the solution, not convince someone of the problem,” Narcisco explains. “They’re likely coming to you because they already know they need it. How many people get a renters insurance quote, get a good price and then go shop it around? Your close rate with renters insurance is going to be pretty high.”
Jacquelyn Connelly is IA senior editor.