This one came up last night at dinner - completely flawed me.
I live in a 4th story apartment which I own. It's a nice area. I don't own home and contents insurance because I figure if someone is able to get through the foyer security door, up 3 flights of stairs, through my door and rob me then so be it. Also, I just don't have that many valuable things. Don't get me wrong, if my dishwasher floods and ruins my carpet, its a pretty big hit, or if someone steals everything I own, all my fiancee's clothes etc, it hurts us but in my view we just don't own enough to justify the insurance costs given our situation. A 20k tail risk isnt that big of a deal.
Fast forward to last night and my friend was saying that we should get home and contents insurance because of the slight possibility of complete risk or ruin. He said that if my washing machine floods, and floods the next 3 levels below us, then the insurance company comes after us and it could be a pretty serious whack. Structural dmaage and we are broke. Or if my oven somehow blows up and lights the entire complex on fire, then once again the insurance company comes after us, and they take everything. Tail risk in the millions.
Is this correct? I have insurance through my strata (obviously) which I assume covered these massive tail risk scenarios but perhaps I'm wrong? If some random occurrence leaves me liable for hundreds upon hundreds of thousands of dollars (dryer blowing up, destroying the building, bath flooding the entire complex, etc etc then surely i need to get some insurance which covers that!??!?!