Gen Y

Sharing economy expands Gen Y liability risks

Tuesday, September 15, 2015

Lack of tenant insurance is endemic across all residential renter households, but risk management specialists caution that Generation Y could be particularly exposed  — and oblivious — to liability. A new white paper from Chubb Insurance focuses on the nearly 15 million Americans aged 34 to 23 who earn more than $100,000 annually and suggests they offer a largely untapped pool of prospective clients for financial advisors.

“Affluent young professionals need coverage keyed to their circumstances: to the luxury city condo or rental apartment rather the suburban mansion; to the shared Mini Cooper rather than the owned Lexus SUV; to the lifetime income stream put at risk by an auto accident or a careless remark in an online forum,” it asserts. “To take part in the sharing economy, emerging wealthy professionals must insure that income stream against the risks of using Airbnb — and (the risk) of their roommates.”

Social media and the burgeoning sharing economy expand the range of Gen Y liability risks beyond what young adults faced in earlier eras. The white paper warns that unseemly online comments can prompt defamation charges and/or arise to haunt the author at a time long after, while housing swap services increase the potential for property damage, property loss or liability due to injuries sustained on the property.

Although the stats aren’t categorized by age, the white paper cites U.S. Insurance Information Institute findings that only 40 per cent of residential renters carry occupants’ insurance. Given that approximately 72 per cent of Gen Y households live in rental housing, it can be deduced that a significant portion are not insured.

Coverage requirements for roommates can also be overlooked. Knowledge of state laws and paying attention to policy details are critical since rules applying to multiple roommates vary. The white paper advises that many of the approximately 36 per cent of young professionals still living in their parents’ homes should also have some form of tenant insurance.

“Under most liability policies, children cease to be dependents and, therefore, cease to be covered when they turn 26,” the white paper reiterates. “Turning 26 is tantamount to moving out of the house.”

Indeed, the white paper subtly notes that these earners could be urged to make that move literally as well as conceptually. “This group of young professionals should be educated about the burdens they impose on their parents by living with them. This may be particularly true in high-net-worth households where the stakes are much higher,” it states.

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