Stay Protected From the Unexpected With Renters Insurance

You're on the hunt for a new apartment, and you've found one that's perfect. After running the numbers, you're almost ready to call the landlord and sign the lease. You might just have one last question as you finalize things: "Do I need renters insurance?"

For any renter, this is a question to consider carefully. Although renting means you don't have all of the responsibilities of a homeowner, there are still instances that could leave you liable if you aren't protected. Renters insurance can help keep you covered if the unexpected happens to your personal property while you're living in a rental.

The basics of renters insurance

A renters policy is a type of property insurance that protects you from personal property damage as well as potential liabilities. Your landlord also likely has insurance, but that won't address all your risks as a renter. Your landlord's policy will cover the building, not your personal property or liabilities within your home.

The three primary coverage areas of renters insurance include:

• Personal property. Your renters policy protects your personal items so you can replace them if they're damaged or stolen. This covers anything you moved in with and will take with you when you move out—furniture, electronics, clothes, etc.
• Liability. This covers you if you cause someone injury or damage their property.
• Loss of use. This portion of the policy kicks in if you have to live somewhere else for a little while because your home is uninhabitable.

These three basic components of a renters insurance policy provide financial protection against unforeseen events. If you don't have insurance and an accident happens in your home or your belongings are damaged or stolen, you'll have to cover those costs out of pocket.

Why you may need it

Just like any other type of policy, renters insurance helps protect you from paying for damaged or stolen goods out of your pocket.

Unfortunately, it's not uncommon for accidents to happen in apartments. Here are a few common scenarios renters may experience.

1. A pipe bursts and the apartment above yours floods, causing water to leak down through your ceiling and ruin your couch.
2. There's a burglary in your building, and your laptop and TV are stolen.
3. Your friend comes over to watch the big game, then trips and falls on a slippery floor and breaks his arm.
4. During a severe thunderstorm, a tree is struck by lightning and falls onto your building. Branches damage one of your windows, and you can't stay in your home until it's fixed.

If you're worried about any of these scenarios, a renters insurance policy may give you peace of mind. Depending on the type of coverage you get, your insurance can replace your water-damaged and stolen items, pay the hospital bills for your friend's broken arm, and cover the costs of having to stay in a hotel for a few nights until your window is repaired.

How it works

Your basic renters insurance will cover your personal property inside your home. It should also cover the cost of damage to your property from events like fire, lightning, wind, vandalism, water damage and electric short-circuits.

If you experience a loss in these instances, you can file a claim. Your insurance company will reimburse you for the value of your items at the time they were damaged. Alternatively, they may cover the cost to replace the lost or damaged items.

There are some things renters insurance doesn't usually cover. These can include high-end valuables such as paintings or jewelry. It also won't cover your vehicle or items related to a business you operate out of your home. Your insurance company likely offers policy add-ons to protect high-value items and other scenarios outside your basic policy.

How much coverage you need

Some landlords require tenants to provide proof of renters insurance with a minimum liability limit before they move in. If your landlord doesn't have these requirements, you can chat with an insurance professional about renters insurance to determine your exact needs.

A good rule of thumb is to acquire personal property insurance equal to the value of the items covered. Take a quick inventory of your belongings and add up their value. This will give you a good baseline. Many policies will offer as little as $5,000 up to tens of thousands, depending on the value of your belongings. Consider adding replacement cost coverage, too—instead of being reimbursed for the depreciated value of your items, you'll be reimbursed for new items.

For personal liability, most policies include $100,000 in coverage. Increasing this to $500,000 may only cost a little more. You can look at your own risk levels to see whether you'd feel more secure with higher coverage.

The key is to find a policy that best suits your needs and gives you adequate coverage. With the right insurance in place, you can sleep more soundly in your new apartment knowing your property is protected.