I carry the minimum amount ($10,000 coverage for possessions) of renter's insurance my landlord requires (due to the $100,000 of personal liability coverage that comes with it). Every expert resource I've come across recommends everyone not just carrying renter's insurance, but covering enough to cover all of one's possessions, and at replacement value at that. (And don't forget about riders, earthquake insurance, flood insurance…)
But the general concept of insurance is to cover major unexpected expenses you couldn't afford to relatively easily absorb. I have ~$130k in liquid investments—and ~$750k more in retirement accounts—and the contents of my apartment are only worth ~$30k. (I could afford to buy a house, but I choose to rent for personal reasons.)
Rationally speaking, should I increase my renter's insurance to cover the full value of all the possessions in my apartment? And at their replacement cost? If so, I should take the time to inventory my possessions to ensure that I'm neither over-insuring or under-insuring, even if that takes many, many hours of my time, right?
Or wouldn't it make more sense for me to just use the $130k in investments as self-insurance (and save my time for more valuable pursuits)? Obviously I'd hate to lose $30k, but I'm not that risk averse, and insurers obviously exist to make money. (This is why experts don't recommend extended warranties or insurance for small-ticket items.)
I'm trying to understand whether I'm missing something…or all the expert recommendations are based on an inflexible conventional wisdom that presumes that all renters are relatively resource-poor. My personal finance advisor just replies, "Renter's insurance isn't that expensive. It's worth covering all your stuff." Is it?
@TTT nailed it: Note that this question is distinct from the question, "Should I get renter's insurance (at all)?" I definitely want renter's insurance (which includes personal property coverage, liability coverage, and coverage for expenses incurred due to the apartment being uninhabitable). I'm inquiring specifically about how much personal property coverage I should maintain and whether it should be more than the minimum offering and/or as much as my possessions are actually worth.