THE BLOG
03/10/2015 09:34 pm ET Updated May 10, 2015

What Does Renters Insurance Cover?

A lot of questions come to mind when it comes to coverage for your apartment: What does renters insurance cover? What does renters insurance cost? Is it really worth the money?

It may seem like a mysterious beast, but this coverage can make the difference between losing everything you own and getting back on your feet in a jiffy when things go wrong. Learn more about the different types of renters insurance and the general coverage they provide:

Personal Property Coverage

When someone experiences a fire, burglary or other incident in his or her apartment, personal property coverage is there to help replace the personal belongings lost in the event. This coverage applies to all of your daily use items, from your kitchen appliances to your clothes, as well as more expensive belongings.

Many people put off purchasing property coverage, particularly renters, as they believe they don't own enough valuable stuff to warrant renters insurance. But it can be surprising just how much it would cost you to replace the items you have accumulated.

To determine a general value of your apartment, go through each room and take an inventory of your belongings. Look not just at the big-ticket items such as your television and home stereo system, but also the smaller things -- the price of towels, toiletries, curtains, utensils, and other oft-forgotten items adds up fast.

Depending on the plan you purchase, there's generally a limit to the amount that can be collected with each claim. If you have a lot of high-price items, it may be wise to take out extended coverage that comes with higher limits.

Liability Coverage

A liability coverage policy is meant to pay for bodily injury and property damage to other people. It is used when an incident that occurs in your apartment is caused by your own negligence or actions, such as if someone slips on a loose rug and hurts his or her back.

It may seem like an unlikely scenario, but the fact of the matter is that these things happen. And when someone tries to sue you for an accident that occurred in your apartment, the benefits of liability coverage will well outweigh the renters insurance cost.

Depending on your plan, this policy will cover legal costs, medical bills, and other damage costs. It may also cover damages caused accidentally by guests in your home. For instance, if you and your friends are enjoying a lively game of indoor kickball and send the ball flying through a neighbor's window, your liability policy may pay to have the window fixed.

Additional Living Expenses

This type of renters insurance helps pay for the expenses you may face if you're unable to stay in your apartment. This includes the cost of living arrangements, eating out, and other expenses that you may accrue in these tough situations.

For example, a major flood or leaky roof may require you to stay at a hotel for a week. In this case, your additional living expenses coverage should take care of the cost of the hotel room up to a certain amount.

When shopping for a policy for your apartment, it's important to weigh the cost of going without coverage and the renters insurance cost. In general, there is never a situation when one should go without at least personal property insurance. However, you may find that it's not in your best interest to purchase liability or additional living expense coverage.

Whatever you choose in terms of renters insurance, be sure to shop around, choose wisely and be prepared for any surprises that may come your way.