Renters insurance is a good thing for any renter to have, providing protection for personal property as well as peace of mind in the event a loss should occur; however, only a minority of renters have insurance. While homeowners insurance is commonly held among homeowners, renters insurance isn’t nearly as common; in fact, studies show that only about a third of renters have insurance.

The difference between the number of homeowners with insurance and the number of renters with insurance may be attributable to a few things. First, homeowners insurance is almost always required when a home has a mortgage. Conversely, most landlords do not require a tenant to have insurance to enter into a rental agreement. Second, renters may not realize the importance of having their own coverage. Many renters may mistakenly believe that they will be covered by their landlord’s insurance policy. However, typically only the building/structure, including any appliances that came with it, is covered by the landlord’s policy; the renter’s personal belongings are not. Third, renters may not realize how affordable renters insurance is. Most policies cost less than $20 per month.

Renters insurance provides three areas of protection: personal possessions coverage, liability coverage, and additional living expenses. Renters insurance can cover damage to personal property caused by fire, smoke, lightning, water, windstorm, explosion, theft, and vandalism. Like homeowners insurance, however, renters insurance does not include flood coverage, which can be obtained through the National Flood Insurance Program, or earthquake coverage, which can be obtained through a separate policy, or in some cases, an endorsement to the renters insurance policy. A renters insurance policy can also cover injuries to third parties that occur on the property. Additionally, the policy can cover additional living expenses, or ALE, which includes alternate housing when the renter’s apartment, rental home, or dorm is damaged by a covered loss.

A renter should assess his or her personal property to determine how much coverage is necessary. The Insurance Information Institute provides a checklist and a free home-inventory tool on its website that can help a renter determine the value of his or her assets.

For the cost of just one meal out per month, renters insurance can save a renter thousands of dollars if a loss occurs. An insurance policy can be obtained in a matter of minutes and can save a renter an invaluable amount of time, money, and hassle should a loss occur.