Renters' insurance will insure all of your property within your apartment; most people consider it a necessity, since your landlord has insurance only on the building. If you are a student, check to see if your parents' policy will cover you.
What Does It Cover?
Renters' insurance will cover all of the property inside your apartment, and some policies will also cover your property when it's outside your apartment. For example, if your bike is stolen when it is parked at your friend's apartment, your renters' insurance may reimburse you for the cost of your stolen bike. Renters' insurance also covers fire or water damage.
Consider a replacement-cost policy. In the stolen bike example, a replacement-cost policy would foot the bill for you to buy a new bike similar in quality to the one you lost. Without this kind of policy, you would receive an amount equal to what your bike is worth minus depreciation, which probably wouldn't be enough to buy a new bike. A replacement-cost policy will increase your premium slightly, but it can be worth it in the long term.
There are limits on reimbursement for expensive items. If you have a computer or stereo equipment or costly jewelry, you may want to insure those separately. If you have items of great sentimental value that can't be replaced, you should put them in a safe deposit box.
Your insurance should also cover personal liability. Most renters' insurance policies will cover all non-auto accidents, including accidents that happen outside your apartment. Let's say that before your bike was stolen, you accidentally hit a pedestrian with it and he or she sued you. You are protected against lawsuits because you have renters' insurance. Although coverage varies, typical policies usually include at least $100,000 in personal liability coverage to protect against bodily injury, property damage or personal injury to others for which you're held liable.
How Much Does It Cost?
For as much as it covers, renters' insurance is relatively inexpensive. The National Association of Insurance Commissioners estimates that the average policy costs only about $180 to $360 per year. Compare that with auto and health insurance and it's a bargain.
Make Claims Easier
As soon as you obtain renters' insurance, document your belongings. Photograph everything you would want to have replaced. If you can't do that, write a detailed list of items you are including in your claim. Having a record of your belongings will be important in settling claims with the insurance company.