Best Money Move of 2020: Investing in Renters Insurance

January 2020

by Caroline V. Clarke

One Sunday in the winter of 2017, Sheila Bridges’ sprawling Harlem apartment went up in smoke. Not flames, luckily, but a fire that started in a basement storage room shot thick black vapor straight up to the top of her pre-war building as if through an efficient flue.

The fire was extinguished in less than 30 minutes but within half that time, Bridges’ 8th floor home of more than 20 years was filled with a dark haze that ultimately blanketed every surface from her walls and window treatments to her dishes, computers, and clothes.

It would’ve been a crisis for anyone, but for Bridges, a renowned interior designer who not only works from home but uses the finely appointed space as a showplace for her work, this was an all-encompassing nightmare—and an expensive one.

“My home is my calling card for potential clients and I’ve lived there for most of my adult life,” says Bridges, whose clients have included former President Bill Clinton, entrepreneur Sean Combs, music mogul Andre Harrell, and bestselling author Tom Clancy. “Renting sometimes feels transient—when I don’t own it, why would I paint it or fix it or invest in it? But I invested tremendously. I’ve painted, papered, and renovated. And, like anyone, it’s my home, so all of my belongings are there, all those irreplaceable personal things that mean the most.”
The logistics of restoring her home to normal were daunting, but what eased Bridges’ stress and prevented the fire from being a financial disaster was the fact that she had renters insurance.

After her $500 deductible, a policy that cost her less than $700 a year fully covered more than $200,000 in expenses, enabling her to fully restore her home and most of its contents, which meant both a great deal to her personally and to the vitality of her business.

“Even without any actual burning, fire is just so damaging,” she says. “My apartment had this fine black dust over everything and it just got worse as it came through the heating system and settled into every cavity, crack and crevice in my and my neighbors’ homes.

“I had to send more than 75 pieces of art and photography to be restored,” she recalls. “That alone cost about $100,000.”

The Philadelphia native says she has her late father to thank for her ability to salvage so much despite the catastrophe. “This is one of those things my dad was big on. From the moment I moved to New York, my father said you have to get renters insurance. It’s probably hands-down the best financial decision I ever made.”

At a time when more people are renting than in the last 50 years—about 37% according to the Pew Research Center—renters insurance could be one of the best and most overlooked investments around.

“People will get car and homeowners insurance because they’re made to by lending agencies,” explains Jain Williams, a State Farm insurance agent in Oakland, California. “Even here in California, where fires are an issue, a lot of people don’t know about renters insurance and don’t take it even when it’s offered.”

This is especially true of millennials, who have a uniquely complicated relationship with the idea of homeownership. Despite rising rental costs nationwide, the number of millennials who say they plan to always rent is also on the rise. According to a 2019 survey by Apartment List, 12.3% of millennials don’t expect to ever own a home, up from 10.7% in 2018.

Their reasons largely hinge on an inability to save a down payment while also paying off education debt. According to Apartment List, the primary obstacle cited by black millennials is bad credit.

Yet, despite its affordability, Williams says renters insurance is still vastly underutilized. Created to protect renters primarily in case of theft or fire, she notes, “Everyone always says, ‘it’s not going to happen to me.’”