03/19/2012 02:44 pm ET Updated May 19, 2012

Renters Insurance: A Skeptic's Guide

By Cassandra Paré, Marketing Manager, Women & Co.

In a recent Women & Co. editorial meeting, I was charged with the task of writing an article on renters insurance. As a seasoned apartment renter, I'm a bit embarrassed to admit that, before I was tasked with writing about it, I had never heard of renters insurance. Certainly I knew about homeowners insurance, and I was also aware that my landlord was insured... but I didn't know that additional protection was available to me as a renter.

As a somewhat jaded insurance-purchaser, I set out to learn everything I could to avoid falling prey to a policy that provides less-than-sufficient coverage. Call me a cynical New Yorker if you must, but I think a touch of cynicism is just what I need to make sure I'm not fooled again. So what do you need to know about renters insurance? Here's what I learned, complete with "caveats," which lend voice to my "cynical New Yorker" better half.

Renters Insurance: What Is It?
Renters insurance protects you personally as the renter, as well as the property you own. Think you're covered under your landlord's policy? Think again. Your landlord's insurance usually only covers the building you live in.

Caveat: Some buildings may require you to purchase renters insurance. Check with your landlord to learn your building's policy on the matter before you sign the lease.

What Can It Cover?
Property damage coverage. Renters insurance can protect you if your property is damaged: think leaks, robberies, vandalism, fires, hurricanes, etc. You can choose between policies that will reimburse you different amounts for your damaged or destroyed belongings: replacement cost (what the item costs today), historical cost (what you originally paid for it), or actual cash value (the item's depreciated value).

Loss-of-use coverage. This coverage can be helpful in the event your apartment is damaged and you have to seek residence elsewhere (like a hotel) while the repairs are being made.

Liability coverage. This type of coverage can help cover your legal fees (such as defense fees and damages that may be awarded) in the event a visitor is accidentally injured while on your property (or elsewhere, depending on the policy). This type of coverage may also provide payment related to your legal liability in the event a guest's property is damaged while at your residence.

Medical coverage. This coverage can help cover medical expenses in the event a guest is injured while on your property. Keep in mind that this type of coverage typically does not pay for your medical expenses or the medical expenses of family members who live with you.

Caveat: Note that I said your renters insurance policy "can cover" these items. Every policy is different; make sure you read your specific policy to find out exactly how you're protected.

What Does It Cost?
I found out that, actually, renters insurance can be quite affordable, particularly if you purchase it along with auto insurance in some form of a packaged deal. Some quotes I saw were as low as $15 a month. That's less than my monthly Starbucks "bill"!

Just like other forms of insurance, you choose the amount of coverage you want, select the amount of your deductible, and pay a monthly premium depending on your choices.

Caveat: Consider choosing a policy that accounts for the value of your belongings and offers enough coverage to adequately protect you in case of an emergency. What you ultimately decide, of course, depends on the value of what you own and how you assess your risk of experiencing an "emergency."

Is Renters Insurance for You?
Remember, like the lesson I learned in my own experience, there is no value in an insurance policy that doesn't provide you with the coverage you need. So when deciding which renters insurance policy is right for you, sit down and really consider your risks: Do you live in an area with constant flooding? Do you frequently host guests in your home? Are you on a ground floor apartment with no bars on your windows? Once you evaluate your risks, it will be easier to decide which policy is appropriate for you. And, of course, if you do opt for renters insurance, once you settle on a policy, do your research and read the fine print!

About the Author:
As Women & Co.'s Marketing Manager, Cassandra brings professional experience working in marketing within the media industry. She has an undergraduate degree from the University of Pennsylvania and an M.B.A. from Fordham University. Cassandra seeks to understand the distinct financial needs of our members in order to help provide extensive financial resources. In addition to her role at Women & Co., Cassandra is an active member of Fordham Women in Business and is a regular volunteer with New York Cares.