In March 2020 I posted an essay entitled Renters Insurance Helps a Residential Tenant When He Accidentally Burns His Apartment but Not When He Accidentally Floods His Apartment. Full Coverage Should Be Mandated by Statute. The Minnesota House considered such a bill this past session. The bill was passed by the Commerce committee and advanced to the House floor but without a companion Senate bill it died there.
The insurance-industry lobbyist made a common argument in committee – that the bill would have the unintended consequence of raising premiums and forcing tenants to give up renters insurance. Part of his assertion was predicated on the idea that Melrose Gates, LLC v. Chor Moua, 875 N.W.2d 814 (Minn. 2016) combined with requiring water-damage coverage would decrease landlords’ insurance premiums and raise tenants’ premiums.
I decided to test the assertions in two ways: [1] I obtained quotes for a typical renter’s policy from the companies with water coverage and those without. [2] I reviewed insurance-company filings with the Minnesota Department of Commerce post Moua.
Although the difference was not statistically significant, the average premium for policies with water coverage was actually slightly lower than for those without coverage. And the filings with the Commerce Department indicated a very slight effect of adding water coverage; adding water coverage increased renter’s insurance premiums between zero and 42¢ per month.
In short, as discussed fully in this essay in Word and in PDF, the claim that requiring water-damage coverage would harm rather than help tenants appears unfounded.
Two appendices and a graph referenced in the essay are available here: Appendix 1, Appendix 2, and Graph 1 (and by links in the Word version).
Birnberg Minnesota Legislative Newsletter 