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Published Oct. 22, 2008

Whether you own or rent, you've got furniture, clothing, electronics and a whole lot of other stuff. But that's where the common ground ends. Most homeowners have insurance that covers the loss of their possessions in the event of a fire, theft or other covered peril. That's not the case for renters. - Nationwide, 96 percent of homeowners have homeowners insurance (such insurance is a requirement of having a home loan) while only 43 percent of renters have renters insurance, industry statistics show.

What does it cover?

Renters insurance covers the loss of personal property due to fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage from plumbing. Renters insurance also provides for temporary lodging. But it does not cover damage caused by earthquakes, floods or landslides. Such coverage has to be purchased separately.

How much does it cost?

Premiums for renters insurance are tied to the insured value of your possessions and the size of the deductible, among other factors. You may get a discount if you get a renters insurance policy from the same carrier as your auto policy. The average yearly premium for renters insurance was $261 in 2003, according to industry statistics.

What to look for

When looking for renters insurance, make sure the policy has replacement coverage as opposed to actual cash value coverage, experts advise. With replacement coverage, the insurance company pays up to the policy's dollar amount for what it costs in today's dollars to replace the items. Actual cash value pays the replacement cost minus appreciation.

Renters insurance includes personal liability coverage for medical and legal bills if the insured renter causes accidental injury to other people and/or their property. So if someone trips over your coffee table and breaks an arm, you would be covered.

Some renters policies can also include dog bite liability with coverage depending on the dog's breed and whether there is a history of biting.

When a renter has roommates, it's important to ask the carrier if the policy can be written in the names of the all roommates.

Be protected

Some renters incorrectly assume the landlord's insurance for the apartment building will cover their possessions.