Today, it's hard to imagine the apartment industry without renters insurance.

For a variety of reasons, many property management companies require their residents to purchase this kind of insurance. It covers properties for extreme property damage  and liability caused by residents, and may also cover the cost of replacing a resident's personal belongings in the event of a disaster. It is now simply industry standard.

Given how widespread it is now, it can be hard to remember that renters insurance was initially met with a great deal of hesitancy and skepticism. But that reaction is worth remembering as new technologies and solutions continue to emerge for the industry's consideration.

A Reluctant Embrace
Sometime around the mid-2000s, we began to see the major operators insert provisions in their leases mandating that residents purchase renters insurance. The benefits of doing so just became too obvious - for the property and residents alike.

Before that, though, most communities were downright scared of doing so. The thinking went like this: if the property across the street doesn't require renters insurance and mine does, I'm going to lose the prospect to the property across the street. You could almost hear property managers say, "I have to do it the same way we've always been doing it because if I do something different, it's going to cost me residents."

Slowly, over time, enough properties had to deal with residents wanting owners to replace their stuff in the aftermath of a fire or other disaster. They saw the tremendous tension and bad blood that could develop in such situations. From a financial perspective, owners were seeking an opportunity to lower their P&C insurance costs and requiring renters insurance offered a way to achieve that.

The reluctance to embrace renters insurance also reminds me of another industry disrupter: having residents pay for their own utilities. It's almost inconceivable to think there was a period when operators absorbed these expenses but that was the standard practice for the longest time.
 
Eventually, some operators began to realize that requiring residents to pay for utilities was a good way to shed a huge portion of their expenses. But widespread adoption came slowly. After a long while – and after some of the major players had begun doing so – most property managers realized they could charge for utilities without occupancy rates cratering.

The Next Wave
The industry's experience with renters insurance and utility billing have an obvious lesson: the multifamily industry can be extremely hesitant and cautious when it comes to adopting new solutions and processes, even ones that offer seemingly obvious and profound benefits for operators.

Such caution is certainly understandable: all of us, in our own ways, can be held captive by our old habits and our timidity about a new way of doing things.

Eliminating deposits and using lease insurance, implementing smart home technologies, leveraging AI or chatbots, or offering custom-branded resident apps, could all be part of the next disruptive phase in multifamily. Technology is the driving force behind disruption and innovative thinkers and supplier partners are always developing new and better methods for operating multifamily portfolios. The industry just needs enough operators who are ready to serve as trailblazers.

Today’s most dangerous phrase: We’ve always done it that way! ~Admiral Grace Hopper