Clothing advice that brokers should give tenants buying insurance

Tenant’s insurance is not only unprofitable for many brokers, but it’s also hard to sell because consumers underestimate the cost to replace contents, a Toronto broker says.

Greg Robertson, president of R. Robertson Insurance Brokers Ltd., advises tenants to consider how much their clothing would cost to replace. “I don’t know the true statistic, but I would guess that 90% of all tenants’ insurance policies are undervalued,” he said, meaning the insureds do not buy contents coverage with high enough limits.

A consumer with “just a basic wardrobe” could have $5,000 to $10,000 worth of clothing in it, Robertson said. But consumers tend to “have no concept of the true value” of items – such as winter coats – that they own. “They don’t understand what it’s going to cost to replace everything,” he said. “I think that’s the biggest issue with tenant’s insurance. It has always been frustrating for me.”

Many colleges and universities have school years ending at the end of April. With students moving out of their current housing, there is, in theory, the potential to acquire new customers by selling students tenant packages, Robertson noted.

But for most brokers, developing new business from students moving is a “very big time waster from the standpoint of profitability,” Robertson added. This is because the average tenant’s insurance package costs $200 to $400 a year, meaning the broker would only earn commissions of $40 to $80. This, for a policy that could cost the broker $50 to establish when factoring in the time and effort.

“If you already insure their parents, you will [probably] help them out,” Robertson said of students. “But at the end of the day, is there any money there? Probably not.”

Traditionally, people buying tenants insurance are not interested in the coverage, said Robertson. In most cases, they are buying it either because their broker is giving them a discount on auto insurance if they buy a tenant package, or if the landlord refuses to rent to someone without tenant’s insurance.