Renters Insurance: A fire study

In 2004, Ben and I lived in different cities – me in Boston for law school and him in New Jersey for work. He rented a pretty cool apartment on the first floor of a three flat in West New York. It was a nice place with lots of space, a great view of Manhattan just across the street, and amazing wood floors.

One early February morning, I get a call from Ben. The first thing he says is, “My house burned down.”  I couldn’t quite comprehend what was going on 1) because it was around 4 in the morning, and 2) because I could hear a lot of commotion – sirens, people yelling from across the street, and of course, Ben in a panic. 

The refrigerator in the basement apartment blew a fuse and started a fire. The guy that lived in the apartment was also out of town, so the fire was left on its own to spread throughout the building and torch those beautiful floors. Ben woke up to smoke everywhere, and being the smart guy that he is, immediately got out of the apartment. His building mates also got out, and the fire department eventually subdued the blaze.

It turns out it was actually a slow burning fire; so Ben would have had time to grab some of his things or at least put on some clothes. (February in New Jersey isn’t the best time to get caught outside in your underwear, t-shirt and a winter coat). Instead, he spent several hours in the street watching the contents of his life go up in smoke.

All of his stuff was ruined – his clothes, his pictures, his bed…everything. We don’t really talk about the fire that much. But the stress of that moment still shows up whenever Ben smells smoke or fire.

Luckily, he had a boyfriend who convinced him to buy renters insurance. So instead of freaking out about where he would get money to live (he was pretty broke at the time), his insurance company gave him a large check to replace his belongings, paid for substitute housing for six months, and gave him immediate cash for his living expenses.

He often tells people his life would be totally different had he not had the insurance. He would likely still have credit card and other consumer debt, he wouldn’t have been able to move to Boston with me, and he might not have chosen his current career path.

Unfortunately, his building mates weren’t so lucky. None of them had insurance.  And yes, they managed to still get through the tragic event, but I would bet they still feel the financial impact of the fire a decade later.

The moral of the story comes back to what I discussed yesterday: you never know what can happen. Everyday we take on risk and in a split second our lives can change.  So you should do your best to mitigate your risk of loss as much as reasonably possible. Insurance can’t replace everything that a tragic event can take from you, but it at least allows you to concentrate on getting over that loss without the financial burden as well.