Renters insurance covers your personal belongings in the event of theft, fire and other problems listed in your policy.

It also includes renters liability insurance, or personal liability coverage, which offers financial protection if you cause injury to someone else or accidentally damage someone else’s property. For example, if someone is hurt in your unit due to your negligence or you accidentally start a fire that damages another apartment, and you get sued, this liability coverage will kick in. It also pays for your legal defense.

Another perk of renters insurance is that it can pay for extra costs if you can’t live at home due to damage, such as fire damage. Here’s a closer look.

Personal property coverage

Renters Insurance covers your personal property, including furniture, clothing, jewelry, electronics and even knick-knacks, as long as they were stolen or damaged by a problem listed in your policy. Renters insurance will extend to personal belongings in your vehicle, such as items stolen from your car.

Your personal property is only covered up to your policy limit, and be aware of coverage limits for specific items. Here are some examples of special limits in a standard renters insurance policy:

• Limit of $200 for money, bank notes, gift cards and related items.
• Limit of $1,500 for jewelry and watches that are stolen.
• Limit of $2,500 for silverware, goldware, platinum-ware and related items that are stolen.
• Limit of $2,500 for items used for business purposes.

Check your own renters policy to find its special limits. If you have expensive jewelry or art, you can schedule personal property separately, which lets you fully cover items outside of the renters policy limit.

Personal liability coverage

The personal liability coverage in a renters insurance policy provides financial protection if you are sued for causing injury or property damage to others.

This could include:

• A guest slipping and falling in your unit.
• Your dog biting someone, even at the park.
• Your bathtub overflowing and damaging the unit below you.

Liability insurance also pays for your legal defense and can cover any damages if the court finds you were negligent. It’s a good idea to buy enough personal liability insurance to cover what you could lose in a lawsuit.

Additional living expenses coverage

If your home becomes uninhabitable due to a problem covered by your renters insurance, additional living expenses coverage will pay for the cost to live somewhere else until you can return.

Additional living expenses coverage can include hotel stays, meals, pet boarding fees and other expenses that result from being displaced, up to the limits of your policy.

This is also referred to as “loss of use” coverage.

What Does Renters Insurance Not Cover?

Earthquakes and floods are not covered by standard renters insurance. You would need separate flood insurance and earthquake insurance policies for those disasters.

Renters insurance also doesn’t typically cover:

• Mold.
• Damage from pets, pests or rodents.
• Your roommate’s property, unless they are listed on the policy, too.
• The physical structure of your home (that’s covered by a landlord’s insurance policy).