Renter’s insurance works well for the types of incidents most likely to be encountered in rental situations. Theft of a dwelling’s contents is covered, though often with the exception of treasured valuables such as jewelry and collectibles. It also covers damage from events like burst pipes or fires.

Some qualities of renter’s insurance are unique to renting. For instance, liability coverage will protect renters from damage for which the landlord holds them accountable. Actual Cash Value coverage is cheaper but only covers appliances’ original value minus depreciation, while Full Replacement coverage replaces damaged property with new items of similar quality.

Renter’s insurance will not cover damage caused by natural disasters, so other policies are necessary if the unit is in areas of high flood or tornado risk.

One benefit of renting is that tenants are not responsible for maintaining the property on which they live. This is also a drawback since it subjects renters to risks that landlords aren’t liable for. For instance, landlords aren’t responsible for water damage caused by a burst pipe. Since it is not the tenant’s burden to maintain the pipes, a renter without insurance is left in the unenviable position of paying for a problem they did not create.

Renters insurance will not cover instances of neglect known to both the tenant and the landlord, however. Hence, it is essential for tenants to report dangerous conditions and to retain the proof of having done so.

Renter’s insurance is a bargain. For a few dollars per month, tenants are insured against various disasters that the landlord-tenant relationship makes avoiding difficult or impossible. Any tenant owes it to their safety and peace of mind to invest in a quality renter’s insurance policy.