Wedding season is in full swing, and recently I looked into renting a designer dress for a wedding I was attending. I didn’t want to wear a dress everyone had already seen me in, but I also didn’t want to spend a lot of money on a dress I would likely only wear once or twice. Renting a dress seemed like a perfect fit.
Fashion rental companies such as Rent the Runway, Bag Borrow or Steal, and ArmGem are on the rise because of the high expense of designer clothes and the desire to wear the latest fashion. According to a Business Insider article, Rent the Runway has grown since it was founded in 2009 to a company with 5 million members and $1 billion in inventory. With these rental companies growing is there a need for designer rental insurance?
As someone who works in the insurance industry, I started to ponder what would happen if I damaged or lost a rental, some of which can be worth thousands of dollars. If I’m being honest, I am very klutzy. I tend to spill things when I’m eating and have been known to catch a piece of jewelry on my dress, leaving a pull or tear. Immediately my mind tends to think of the worst-case scenarios. What would happen if I accidentally leaned into a candle at the dinner table and left a burn mark on the dress? If I rented earrings, what would happen if one of them fell out on the dance floor and got lost? What if makeup spilled in the designer bag I rented and destroyed the inside of the bag? Suppose I stumbled in my new heels and scuffed them up or broke a heel. The possibilities seemed endless.
Concerned about the risk of damaging or losing a rental I started to question if I could purchase insurance through the rental company. According to Rent the Runway’s website, an insurance policy can be purchased with a rental for a small fee. This insurance policy covers only minor stains or damages and does not cover theft, lost items, or damage beyond minimal wear and tear. Other companies did not offer any insurance at all.
I then began comparing rental clothes and accessories with rental cars. If I want to rent a car for a few days I can easily buy coverage through the rental company or have coverage through my auto policy. Using this logic, I thought maybe I had coverage under my homeowners policy under “liability damage to property of others,” or possibly there was an additional endorsement I could add to my homeowners policy. But when I spoke to my homeowners insurance company there was no coverage that I could add to protect against rented clothes or accessories.
This lack of insurance raises a lot of questions. Should homeowners policies start offering customers an optional endorsement to cover rental items? Should rental companies start offering more expansive add-on insurance to their rentals? If not, is there an opportunity for insurance companies to start writing this coverage and selling it directly to renters? Is it possible this insurance could be used for other types of items in the new rental and sharing economy?
Recently, insurers have begun to cover couture clothes and accessories for owners of high-end fashion. According to an article in Forbes, these policies would cover individual items listed on the policy with an option to use blanket coverage for less expensive items. If insurers are starting to write insurance for owners of high-end designer clothes, why not start writing insurance for renters of these same items?
With the increased demand for designer rentals, there must be a new opportunity for insurance companies. After all, I can’t be the only klutzy renter looking for protection, so let’s start insuring haute couture rentals!