6 Reasons Not to Skip Renters Insurance

Could you afford to replace your entire wardrobe if your apartment caught fire? What about your phone, your laptop and all your furniture? If the answer is no, you probably need renters insurance.

Renters insurance coverage may cost less than you expect. In fact, some tenants could pay next to nothing while protecting themselves from financial hardship. Here's why you may want renters insurance and how affordable it can be.

1. Your landlord’s insurance won’t cover you

Some landlords require their tenants to have renters insurance, but if yours doesn’t, it’s not because they’ve got you covered. Although some people think their landlord’s insurance covers their stuff, this usually isn't true.

Landlord insurance covers the structure of the building but not tenants’ personal belongings. If someone steals your TV or a fire destroys your bedroom furniture, your landlord’s insurance won’t pay to replace them — but a renters policy typically will. A landlord’s policy is also unlikely to help if you accidentally damage a neighboring apartment.

A standard renters insurance policy includes liability coverage starting at $100,000, which can pay damages and legal expenses if you accidentally injure someone else or damage their property.

2. You probably own more than you think

Some people avoid getting renters insurance because they don’t feel they have a lot of valuables.

Take inventory of all of your belongings. Consider if you would be able to replace them if everything was lost in a fire. Once you start tallying up the value of each item — electronics, jackets, shoes and so forth — you’ll probably find that it would cost a lot more than you expected to replace everything.

» MORE: The best renters insurance companies

3. Renters insurance can pay for housing after a disaster

Renters insurance policies can include a "loss of use" benefit, which can reimburse you if your house is uninhabitable and you have to pay to stay somewhere else.

Loss of use coverage can also pay for restaurant meals or other expenses associated with living away from home during repairs.

» MORE: The best cheap renters insurance

4. It can protect your finances

Maybe you’re saving for a down payment on a house, or you’ve worked hard to get out of debt. The last thing you need is a lawsuit wiping out everything you have.

“Let’s say you go golfing … [and] you hit someone in the head and they turn around and sue you,” Brandon Okita, vice president at FIA Insurance Services in Torrance, California, says. If a court finds you responsible, your renters liability insurance will typically cover costs up to your policy limit, even if the incident takes place away from home.

This coverage can also come in handy if your dog bites someone at the park, your child breaks a valuable heirloom at a friend’s house or a guest slips and falls inside your apartment.

» MORE: Renters insurance quotes: What you need to know

5. It covers belongings away from home

Many renters policies provide some coverage for your stuff even when it’s not at home. For example, your policy could cover you if your laptop is stolen at a cafe. (Keep in mind that it would make sense to file a claim only if the lost item were worth more than your deductible, the amount subtracted from your claim payout.)

You may also have coverage for items in a storage unit, Okita says.

6. The cost may be less than you expect

The average cost of renters insurance is $148 a year, or about $12 a month, according to NerdWallet’s rate analysis. But if you have a car, you could pay less by bundling your renters policy with your auto insurance, thanks to multipolicy discounts offered by many carriers.

For example, Okita notes, a 5% bundling discount on a $3,000 auto policy would be $150, which would pay for the average renters policy premium.

You may also be eligible for discounts if your apartment has smoke detectors, burglar alarms or other safety and security devices.

If the worst happens, you’ll likely be glad you paid for the coverage.