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 can’t stop awful things from occurring, but it can make life a little easier if and when they do occur,” Yael Wissner-Levy, vice president of communications at the insurance company Lemonade, said by email.

And the coverage may cost less than you expect — in fact, some tenants could pay next to nothing. Find out why you may want renters insurance and how affordable it can be.

Some landlords require their tenants to have renters insurance, but if yours doesn’t, it’s not because they’ve got you covered. “Many renters [believe] that, since their landlord has insurance, it covers damage to their property. This is not the case,” Wissner-Levy said.

Landlord insurance covers the structure of the building but not tenants’ personal belongings. If your TV is stolen or your dishes are lost in a kitchen fire, your landlord’s insurance won’t pay to replace them — but a renters policy probably will.

A landlord’s policy is also unlikely to help if you accidentally damage a neighboring apartment. “If you [let] your bathtub or sink flood out the apartment below you, the landlord’s not going to cover that,” says Jeff Schneider, president of Gotham Brokerage Co. in New York City. “You can be sued for … causing damage to the apartment below you.”

A standard renters insurance policy includes liability coverage starting at $100,000, which can pay damages and legal expenses if you’re sued for accidentally injuring someone else or damaging their property.

“[One] reason why people avoid renter's insurance is the thought, ‘I don't have anything valuable worth protecting,’” Wissner-Levy said. But you might be surprised.

Brandon Okita, vice president at FIA Insurance Services in Torrance, California, advises opening each drawer and closet in your home to take an inventory of your belongings. 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.

“Most policies provide what’s called a ‘loss of use’ or ‘additional living expense’ benefit,” Schneider says. “It pays you if you are forced out of your apartment by a major claim — usually fire or extensive water damage — and you have to stay in a hotel.”

Loss of use coverage can also pay for restaurant meals or other expenses associated with living away from home while it’s being repaired.

Maybe you’re saving for a down payment on a house, or you’ve worked hard to get out of debt and build an emergency fund. 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,” Okita says. If a court deems you responsible, your will typically cover costs up to the limit you’ve purchased, 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.

Many renters policies provide some coverage for your stuff even when it’s not at home. “If your laptop was swiped at the neighborhood cafe, or your phone stolen on the subway, your policy could cover you,” Wissner-Levy said. (Keep in mind that it would make sense to file a claim only if the lost item were worth more than your .)

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

One common reason to avoid renters insurance is the cost. “A lot of people are not looking for added expenses these days,” Schneider says.

The is $168 a year, or about $14 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 nearly 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. “Renters insurance is the best defense against things in life you have no control over,” Wissner-Levy said. “Once covered, most people see the benefits.”