Students who lost apartments in storm say they were confused by insurance requirement

April 26--JACKSONVILLE -- When Jacksonville State University student Spencer Knighton was preparing to renew his renter's insurance a year or more ago, the staff at his apartment complex told him there was a cheaper option.

"They were like, 'Oh, we've got this for $10, you'll be fine, you'll be covered,'" said Knighton, formerly a resident of the Reserve at Jacksonville.

After March 19, when an EF-3 tornado left Knighton and more than 400 Reserve residents homeless, Knighton was stunned to find that none of his belongings were actually insured. The extra $10 per month tacked to his rent was a waiver fee, levied by the apartment against renters who were uninsured.

"I think they ripped us off," Knighton said.

Knighton is one of several former Reserve residents who say they were misled by the Reserve's rules on renter's insurance, and lost much of their personal property as a result. Officials of the Reserve's parent company say terms of the rental waiver were all spelled out before anyone signed a lease.

"If you look at the lease agreement, it clearly requires you to have rental insurance," said David Colman, owner of ROCO Real Estate, the Michigan-based owner of the Reserve.

Before March 19, the Reserve was an apartment complex that almost everyone in Jacksonville knew. Tucked away behind the Church of Christ campus on Alabama 204, the complex was home to 460 people, according to past statements from ROCO.

The complex was mostly empty on the Monday of spring break, when the twister raked across the city just north of Alabama 204, stripping the three-story complex down to two and a half floors of pockmarked, windowless ruin.

Brandon Wells, an accounting major and roommate of Knighton's, was there when the storm hit. Unaware of the storm warnings until just before the lights went out, he and a few of his neighbors took shelter in a bottom floor bathroom, with Wells holding the bathroom door shut.

"I felt like it was about to be done. Over, for us," Wells said.

No one died in the twister, but for Wells, Knighton and their roommate Bobby Long, it was costly. Knighton lost a computer and a gaming system. With the city under an emergency declaration, residents weren't allowed to return to the complex for days. The three roommates say much of their clothing was ruined by water and mold.

All three had been paying the Reserve $10 per month for what they thought was rental insurance, they say. The owners of the complex say they never told anyone the $10 fee they were charging was for insurance coverage.

Renters and landlord agree on the basic elements of the arrangement. Would-be renters at the complex were told they had to have renter's insurance before signing a lease. If they didn't, Colman said, the complex would offer them a policy through an Atlanta-based company called LeaseTerm Solutions. A typical policy would cost $11.50 per month, according to accounts from renters and posts on ROCO's Facebook page.

For just $10 per month, a fee that went to ROCO Real Estate, renters could opt out of insurance altogether.

Colman acknowledges the purpose of the insurance requirement is to protect the landlord.

"If you cause a grease fire in your unit, who pays for it?" Colman said. If renters have liability insurance, their insurance can pick up the cost for that fire, Colman said.

That appears to be the purpose of the $11.50 insurance policy that the Reserve offered to renters. LeaseTerm Solutions, the Atlanta company that offers the policies, markets itself primarily toward apartment complex owners, not renters, as an alternative to security deposits. According to the company's website, security deposits "are inadequate to cover the cost of lease breaks and damages." The website also offers "optional coverages" that protect the resident's property.

"It's a liability policy, and it protects the residents as well," said John Lineberger, the vice president of operations for LeaseTerm. He said that in the past 10 years, a growing number of apartment owners have begun to require renters to have liability insurance.

Asked whether the $11.50 policy offered at the Reserve would cover a resident's personal property as well as liability, Lineberger said he couldn't offer specifics because it might violate client privacy. He said it's possible an $11.50 policy could cover wind damage.

Lineberger also said he couldn't comment on the number of Reserve residents who have LeaseTerm policies. There's no evidence of resident complaints against the company -- or evidence that any resident took out a policy before the storm.

But residents who took the slightly cheaper option -- the $10 waiver fee -- say the purpose of the fee wasn't made clear to them.

"It could have been a misunderstanding on my part, but I don't think it was explained well," said Alex Partridge, who opted for the $10. "I don't think the whole thing translated well."

Partridge guesses that she lost about $500 worth of personal items in the storm.

Colman, of ROCO Real Estate, said the purpose of the waiver is clearly spelled out in lease agreements.

In fact, a lease agreement signed by resident Spencer Knighton in 2016 does say the renter will be charged a $10 fee which "shall not in any way be deemed to provide any renter's insurance coverage for Tenant's personal property."

"By no means has anyone ever thought that fee would amount to renter's insurance," Colman said.

Still, the setup seems to have confused even renters who've been past college age for a long time.

"We never did see a policy, and that's probably my fault," said Stan Knighton, Spencer's uncle, who helped the JSU student with rent. It was Stan Knighton who provided the copy of the lease to The Star.

Knighton said he was surprised to hear that the fee existed to cover the landlord's costs, because he believed it was illegal to insure another person's property.

"I've not been able to get to the bottom of anything, as far as rental insurance goes," said Kelli Winkles, who helped her college-age son rent a Reserve apartment. She recalls getting a brochure about renter's insurance when the lease was signed; she's not sure now whether her son had insurance. His paperwork went up in the storm, she said.

Before the storm, Winkles said, residents could log into the Reserve's website and check their payment history online. Winkles and several residents say they're now unable to log on to the site.

Dev Wakeley, an analyst for the anti-poverty group Alabama Arise, said in an email that a renter's insurance requirement is indeed becoming more common as a lease requirement. The waiver fee, he said, sounded new.

"This is the first I've heard of a complex possibly either using renter's insurance to squeeze a fee out of its tenants," he wrote. He said it's possible ROCO believed it could self-insure by charging a fee on its own, or use the fee to pay the company's own insurance.

"The only reason to operate that way is if you're a gambler," he wrote.

Capitol & statewide reporter Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.

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