John Fees and Ben Hoglund
Next Generation Insurance and AZ Apartment Experts
Talk insurance with your residents to mitigate their financial risks — and yours.
The past decade has delivered a unique set of circumstances creating new needs for the next generation of insurance consumers. A challenging economy, rising costs for higher education, innovations in technology and a spate of natural disasters all have paved the way for the emergence of specialty insurance products for the young-adult market.
Higher tuition is not the only challenge for students and their families. Students also bring more valuables with them to college than any generation before. Laptops, smartphones or iPads are a common sight on today’s campuses; they also are expensive to replace when damaged or stolen. And the newest threats of the digital age are the growing occurrences of identity theft, credit card fraud and online reputational damage, which many young adults are ill prepared for and exposed to at an increased rate.
A particular need for more insurance information is apparent within the student housing industry. Each year, student housing providers make considerable efforts to educate their residents on safety and insurance issues, but recent data show that too many college students are still unaware of their financial risks resulting from inadequate insurance and liability protection. This lack of awareness presents a financial risk to student residents as well as student housing providers.
The recently released 2011 Campus Housing Risk Mitigation Study was conducted to identify the challenges that university student housing officials face when addressing property damage and other financial losses due to resident-caused fire, flood, theft, vandalism and negligence, and to find opportunities to protect student housing providers and residents from property and financial losses. The study concluded that less than 60 percent of student residents are aware that they can be held financially responsible for damage to university property for which they are at fault, as estimated by a majority of surveyed chief housing officers.
The study also found that less than 60 percent of their residents are aware that they are responsible for losses to their own personal property due to fire, flood or other incident for which they are not at fault. At the same time, one in three respondents experienced fire, flood and similar incidents in residential units at colleges and universities with damages of more than $50,000 during the past year.
A vast majority of respondents indicated that it is their policy to require reimbursement for resident-caused fire or property damage in excess of $5,000. Of those respondents, about two-thirds indicate they require a reimbursement over 60 percent. Considering the average cost of incidents like fire and flooding, students without adequate insurance could find themselves stuck with five-figure bills which could very well remain unpaid, leaving the bill for the student housing provider.
But not only student renters lack the knowledge of student renters’ insurance issues. While the study found that 57 percent of respondents strongly recommend that residents obtain renters insurance, 24 percent of respondents were unaware that some renters-insurance products do not include personal liability protection.
These findings confirm the urgency of improved education on financial responsibility targeted toward students – and student housing officers. Additional findings on student property illustrate this as well.
• Vandalism, bicycle theft and electronics theft are the most reported personal property losses by campus residents.
• For insurable incidents, vandalism, electronics theft, bike theft and flood produce the highest level of resident frustration.
• Campus policy on required property insurance varies, with many schools having no requirement with regard to renters insurance.
As the 2011 Campus Housing Risk Mitigation Study shows, opportunities to improve education around resident safety issues still remain. In its conclusion, the study provides recommendations on how student housing providers can mitigate property financial losses caused by resident carelessness and negligence:
• Require personal property insurance as well as personal liability coverage for campus residents.
• Improve education targeted toward students and other campus residents regarding their own potential financial responsibility in the event of fire, flood or other property damage caused by their own carelessness or negligence, or lack of reimbursement for damages to their personal property in the event of an accident for which they are not at fault.
• Improve awareness of renters insurance features, especially regarding personal liability protection.
• Change policy to require resident reimbursement for community property damages due to resident carelessness or negligence.
• Conduct an annual risk audit to evaluate the need for requiring personal liability insurance by your residents.
• Speak with a chief risk manager about best practice that may be available to reduce claims.
• Evaluate best practices in off-campus housing programs.
• Contact a national insurance broker such as Next Generation Insurance Group, Sallie Mae Insurance Service or Marsh that offer renters insurance that includes personal liability coverage.
Education on financial responsibility in the event of fire, flood or other property damage, or even accidents, benefits student renters as well as housing providers.
The Campus Housing Risk Mitigation Research Study was conducted on behalf of Next Generation Insurance Group (NGI), a national specialty insurance marketing firm that provides insurance products designed specifically for the collegiate market. NGI’s insurance products include renters insurance provided by CollegeRentersInsurance.com. CollegeRentersInsurance.com not only covers personal property loss in the case of fire, certain natural disasters, theft and vandalism, but also provides personal liability protection for bodily injuries to another person or for damages to another person’s property if an incident occurs within the rented residence or elsewhere.
— John Fees is the CEO of Next Generation Insurance (NGI). NGI builds
specialized insurance products, resources and expertise and offers a diverse
selection of services available through multiple delivery channels.
Ben Hoglund is a CPM and principal of AZ Apartment Experts, a Scottsdale, Ariz-based
firm that provides multifamily asset management, acquisitions and consulting services.