Renters insurance is an excellent way for tenants to protect their belongings. While this coverage is typically optional, many landlords and property management offices require it. With inflation, soaring interest rates, and limited housing forcing many to hold off on buying a home, launching a rental insurance franchise could be a profitable venture.
If you’re an entrepreneur looking to launch a new venture, here’s a look at how an apartment insurance franchise can be a lucrative business.
What Is a Renters Insurance Franchise?
A renters insurance franchise is an agency that sells coverage to those who lease a residential property. This property can be an apartment, a house, a room inside a house, a townhome, a condo, or any other kind of habitation leased to tenants.
A renters policy protects the policyholder’s belongings against loss and damage if a covered event, like a burglary, fire, hurricane, or tornado, occurs. That’s what makes this coverage option valuable to those leasing a property.
A renter looking to buy coverage from an apartment insurance franchise will find that they have three coverage options to consider:
Personal Property
The most fundamental type of renters insurance, personal property coverage, protects tenants against loss or damage to furniture, electronic devices, clothes, jewelry, and other possessions if fire, theft, or vandalism occurs. This coverage option usually includes limits and deductibles based on unforeseen events that cause the damage, with each event having a specific monetary amount.
Liability
If physical harm or property damage occurs to someone in the tenant’s apartment, liability coverage ensures that the tenant and those who reside in the same home aren’t held accountable. If a guest slips and falls while visiting the apartment and sues the tenant, liability coverage can help pay for the guest’s medical treatment.
Additional Living Expenses
Damage caused by a fire or a natural disaster, like a hurricane, can make a rental property uninhabitable. This coverage option helps a tenant pay for a hotel stay, food, and other expenses brought on by the event.
Nationally, a basic renters policy offering $10,000 in personal property coverage and $10,000 in liability coverage costs around $18 a month on average. The actual price a rental policyholder will pay, though, depends on where they live, the type of coverage they have, and their credit score, among other factors.
Do Current Housing Trends Create Opportunities for a Rental Insurance Franchise?
Housing trends in 2023 show strong growth opportunities for a rental insurance franchise. Industry findings indicate that rising interest rates, inflation, and a housing market shortage have forced many to hold off on buying a house, a townhome, or a condo.
This has led many potential homebuyers to rent apartments, houses, or condos as they wait for the market to become more favorable again. Though there’s no indication when this favorable shift might happen. In the meantime, rent rates have gone up, and industry experts expect them to keep rising in the years ahead.
The demand for property management services has been on the rise, too. Property management companies carry out all the tasks a leasing office would tackle, with agents reviewing and processing prospective tenant applications, ensuring tenants have renters coverage, collecting monthly rent payments, handling maintenance issues the leased property experiences, and carrying out other landlord-related tasks.
More renters in the market, increasing rental rates, and a growing number of landlords requiring tenants to have a renters policy creates profitable opportunities for a renters insurance franchise.
Why Are More Landlords Requiring Renters Insurance Coverage?
Leasing a house, an apartment unit, or a townhome to tenants with renters coverage safeguards against any possible legal issues that may arise if a fire breaks out, for example, or extreme flooding after a hurricane causes damage to the renter’s apartment.
Rather than seek compensation from the landlord, the apartment complex, or the property management company, the tenant can turn to their renters policy instead, especially if the event that caused the loss or damage is covered by the policy.
That’s the reason most landlords require renters to cover themselves. This requirement is typically noted in the lease.
If someone applying for an apartment does not want to buy a renters policy, they always have the option to find another property that doesn’t require it. If they do decide to sign a lease with a landlord that requires rental coverage, the policy should cover:
- Fire and smoke
- Theft and vandalism
- Windstorm and hail
- Water damage caused by plumbing, the air conditioner, a furnace, or a water heater
A rental policy minimizes the liability that can cause a rift between the tenant and the landlord, apartment community, or property management company. Given the economic and financial uncertainties of today’s market, many landlords consider it a necessity.
Why Is Opening a Rental Insurance Franchise a Valuable Opportunity?
Opening a rental insurance franchise is a valuable opportunity for several reasons. For starters, the cost of a renters policy will likely increase as the cost of renting a residential property rises. Increasing a monthly policy payment by $1, $2, or $3 may not seem like much, but if you multiply that increase by the hundreds of renters you cover, you can see how this trend can generate additional revenue for your franchise.
Also, with demand for renting generally growing as people wait out the housing market crunch, this means your franchise stands to benefit by growing its customer base, especially if customers bundle their coverage options.
Insurance agencies typically extend a wide variety of policies to customers, so a renters insurance franchise will likely sell auto policies and other types of policies, too. A new customer who signs up for an auto and renters policy will pay a bit more monthly than someone who only has renters coverage.
Launch Your Rental Insurance Franchise Today!
If you’re an entrepreneur looking to launch a new venture, Freeway Insurance can help you open an apartment insurance franchise in your community. Get started online or give us a call at (877) 822-3024
