Millennials without property insurance: What to do if bicycle, laptop stolen?A shrinking proportion of millennials is buying renters insurance, even as smaller proportions of young adults are purchasing homes. File/Credit: David Pendered
By David Pendered
A new wrinkle has emerged regarding millennials who are putting off the purchase of a home. It’s another sign of stress in the housing sector.
Two thirds of millennials who rent their home don’t have renters insurance, according to results of a survey conducted in April for insurancequotes.com. Two thirds of millennials nationwide rent their home. Survey results were released last week.
As a consequence, many millennials who incur property loss may not be able to replace their possessions. Their ability to get to work and perform properly could be impaired if a burglar steals a bicycle and a laptop in a computer bag packed with an external hard drive and a few flash drives – items that could easily cost $5,000 or more to replace.
There was a time when the purchase of homeowner insurance was a routine rite of passage for young adults. Lenders typically required property insurance and the new owners would roll in coverage for every bit of personal property.
These days, homeownership is beyond the reach of many young adults, according to any number of published reports. This phenomenon has a spill-over effect of young adults not purchasing any insurance for the items in their home.
In metro Atlanta, 70 percent of millennial renters say they can’t afford to buy a home, according to a survey released last week by apartmentlist.com.
Part of the reason is a lack of adequate down payment, according to a report that went on to observe:
- “[W]e estimate that many renters will need a decade or more before they can afford a 20 percent down payment on a home. Faced with stagnant incomes and rising home prices, many homebuyers may have to purchase at increasingly high debt-to-income ratios, heightening the risk of mortgage default. Other millennials may have to migrate to more affordable cities and suburbs, or delay marriage and having children.”
The annual homeownership rate for the age group under 35 years dipped below 40 percent in about 2009 for the first time in a decade, according to a chart by the Census that’s cited in the apartmentlist.com report.
Of note, some of the numbers get squirrely when the apartmentlist.com delves into regional markets.
For metro Atlanta, the report says $15,090 is all that’s needed to cover a 20 percent down payment for a starter home. That must come as good news to local millennials who responded to the survey and said they expect to need $21,080 to cover a 20 percent down payment.
However, the survey’s results were based on starter home priced at $75,450 in metro Atlanta, according to data provided by trulia.com.
The inventory of homes priced at $100,000 and under is located mainly southwest of Downtown Atlanta and outside I-285, according to a listing on trulia.com. Most homes outside the Perimeter are between Fairburn and Morrow; with a few scattered east of Decatur; and north of Mableton.
The survey on insurance showed it’s not just a matter of money that’s keeping millennials from insuring their property. More than half of respondents said cost isn’t the reason they lack coverage.
Nearly two-thirds responded that they feel secure enough that they don’t need property insurance. Other reasons given were a lack of stuff to insure, and a lack of understanding about how to go about buying insurance.
In Atlanta, Fulton County, the annual premium on a renter’s policy to insure $10,000 worth of property is as low as $61 and as high as $525. The figures are for a $500 deductible, according to data provided by the Georgia Office of Insurance and Fire Safety Commissioner.