Do You Need Renter's Insurance? Yes, You Do
The house I was living in burned down in 1999, two months before I graduated from college. Suddenly, my world stopped. And it didn't start up again for a very long time. When I made it to my cousin's apartment later that night, she offered me clothes, a place to sleep, and the thing that jolted me into my new reality -- a clean pair of underwear. It was this most intimate of items that brought me firmly into my present. I have nothing left. What am I going to do now?
I was extremely lucky to be covered under my parents' insurance plan. They had what is known as a replacement policy for me. Here is how a replacement policy generally works:
You write down how much you paid for your television and when you bought it.
The insurance company decides how much your television is worth -- how much it would cost to replace that specific television today.
Then, a couple of different things can happen:
You can go buy a new television with your own money, send the insurance company a receipt, and they will send you a check for that amount.
The insurance company can offer you a blanket-type settlement for all of the things you listed all at the same time.
Either way, you now have money to buy a new television, which is a good thing. And when I say "television," I mean every single thing you own, down to your underwear and ridiculously-expensive cleaning products. It's up to you to catalog all of your belongings, and it helps a LOT if you have photographs, receipts, or some kind of proof that you owned that "television" to begin with. Not so easy when everything just went up in flames. This is why I regularly take broad photographs of the rooms in my home. You never know. Lightning can strike twice.
I cannot emphasize enough how important it is to have renter's insurance AND have enough of it. I got a settlement from my insurance company that I think was somewhere around $13,000. That sounded like a LOT of money to my 21-year-old self. What I didn't realize was that furniture, appliances, and clothing cost a LOT of money to replace. Within that settlement, I did not include my clothing. This was a huge error on my part. I was more concerned at the time with replacing all of my books. I went to bookstores and made huge lists of ISBN numbers of the books I had previously owned. It was part of my coping mechanism. If I have my books back, I'll be fine. I was wrong, but that is a whole different blog post.
So I am here to tell you that insurance agents are NOT being smarmy up-salers when they suggest you get or raise the price of your renter's insurance. Let's do a quick activity together:
Look around the room you are sitting in right now. What is in it? I'm in my home office, so the big things are my computer, work-related electronics, and (of course) a bunch of books -- professional and personal. I also have things I take for granted -- drawers filled with knick knacks, office supplies, and coin purses. There are expensive curtains, original artworks, and antique chests from my grandmother. I also have a few boxes of CDs I no longer listen to, but OH MY it would be expensive to replace my entire music catalog. And then there is the radiator heater, boxes of crafting supplies, jewelry, small sculptures, and one of my great-grandfather's clocks.
If I wrote down what it would cost to replace every single thing (at brand-new prices) that is in this very small home office, it could easily total or surpass $13,000. People who have seen my home office in real life might laugh at that statement and think I'm overestimating, but I'm being dead serious. I don't own "fancy" things. Most of my furniture and decorations are hand-me-downs or were purchased at thrift shops. What I'm trying to emphasize is the cumulative cost of replacing all of it. Think about every little thing, right down to the last beloved or needed item. Really think about it.
You can get a really good renter's insurance policy for anywhere between $100–$200 per year. I think mine is right at $150, and it covers waaaay more belongings than my meager, college apartment could ever dream of holding. I requested a higher amount of insurance than my agent originally suggested, because I've been there and done that. And you can bet your life that if I lived on a floodplain, I'd have a large, separate flood insurance policy. This past summer, I watched many of my close friends and neighbors lose their homes or property when the Missouri River flooded the area where I live. Sadly, many of them were uninsured.
It is my sincere hope that no one who reads this post will ever have to go through a house fire, flood, or home invasion. But beyond that wish, I hope that this post will make you seriously think about insuring what you have. Starting over mentally is hard enough -- I can't imagine what I would have done if there had been no money to help me rebuild my life.
Blondie writes at Tales From Clark Street.