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Rent is the New Buy: A Surge of Millennials and Empty Nesters are Opting to Rent


By Nelson Townes III, Vice President of National Sales

There are now more renters in the United States than at any time since 1965 – good news for multi-unit apartment property managers in urban and semi-urban areas, where units are quickly filling up with renters eager to enjoy the communal and social benefits.

Like anything that looks too good to be true, more renters translate into bigger liabilities for landlords, particularly when the renter is a young person generally focused more on their careers, social lives and fun and less so on the condition of their apartments. To obviate these concerns, property managers can reach out to specialty insurers focused on the unique risks and needs of today’s rising hordes of young renters.

Millennials and older members of Generation Z are renting instead of buying condos and houses for diverse reasons, including high student debt loans affecting their home-buying prospects, as well as less interest overall in getting married and children. A recent report by the Census Bureau affirms that Millennials are putting their focus on their careers and education and not marriage and kids.

So, they’re renting. And real estate developers are appealing to this interest by creating unique urban environments with a wide range of housing types and amenities like walkable neighborhoods, ample peoplewatching opportunities, and nearby movie theaters,restaurants and retail shops. Next to gentrifying centuryold rowhouses and mid-century apartment buildings, rental towers with ground floor retail spaces are sprouting like mushrooms after a summer rainstorm.

The relocation of Home Offices by major corporations in midsize and larger cities is part of the rental revival. From the late-1970s onwards, many companies are located from cities to office parks in the suburbs, in part to be closer to their employees living in these areas. Now they’re coming back, re-relocating to urban environments.

The phenomenon has a name – New Urbanism. Major cities across the nation have seen their downtown cores alter over the past decade to provide a panoply of rental apartments. Urban renewal also is underway in smaller cities like Austin, Texas and Arlington, Virginia, soon to become the second global headquarters of Amazon, the world’s largest retailer.

Not just younger people seem to have a preference for the varied pleasures of new urban environments; many retiring Baby Boomers, their children having flown the coop, are migrating from the suburbs to the cities for many of the same reasons their kids and grandkids are residing there.

The bright rental prospects for property managers extend to the average rents charged for apartment units, which were up 3.3 percent in 2018 compared to the prior year’s figures. Occupancy figures were equally stellar, increasing to 95.4 percent from 95 percent at year-end 2017. As competition heats up among renters for the best apartments, many property owners are looking for ways to differentiate beyond price and location. One such defining factor is rental insurance.

For many property owners, tenant rental insurance is obligatory. However, not all insurers of rental units are the same from a coverage, claims administration, and pricing standpoint. Very few insurers specialize in serving the rental market, a deficiency of particular import to Millennials used to high-touch customer services and easy access products via smartphone apps. For some insurers, rental insurance is an accommodation, not a priority.

Property owners can take charge of this situation by contracting with a specialty rental insurance carrier to provide high-quality rental insurance to tenants on an aggregate basis. Not only may this result in lower insurance premiums for tenants, specialty program insurers also have broader coverage terms and conditions, in addition to coverage endorsements designed to appeal to many Millennials and members of Generation Z.

For example, younger renters generally need to provide a deposit as some form of financial guarantee in the event of property damage – a sum that may be beyond the means of younger people stretched to their financial limits. Specialty program rental insurance can be structured so the prospective tenant does not need to provide this deposit.

Other attractive insurer options include the opportunity for renters to receive text messages reminding them when their insurance premiums are due, along with a link they can tap to make an immediate credit card payment, reducing the chance they will be late in paying. Texts also can alert renters of bad weather conditions that are imminent, a subtle reminder to close windows to reduce rain-related and wind exposure damages. Some specialized insurers provide software to assist property managers to track the status of the rental insurance and, where appropriate, assess the tenant for liability insurance expenses if the tenant fails to meet the lease requirement to carry their own liability insurance.

Other novel features in some policies include coverage for electronic devices. Many insurers require proof of physical damage to receive a claims payment, but in some cases the damage is not obvious – the laptop just stopped working because of a micro-electronic failure. For a few pennies a day, the insurance policy will absorb the damage. Other innovative coverages are designed to absorb the cost of remediating the alarming rise in bedbug infestations across regions of the country. Lastly, some specialty insurers ensure that each apartment unit has adequate coverage limits, reducing the need for property managers to file claims on their general liability insurance policies.

With the great number of young people renting for the foreseeable future, a specialty renters’ insurance program can be another way that property managers can differentiate their value in today’s increasingly competitive New Urban markets.