Any renter who has possessions they can’t afford to repair or replace – or simply don’t want to foot the full bill for after an incident – should have renters insurance. Think of all of the stuff you have, and how much it would cost to replace everything in the event of, say, a burst pipe. That can add up quickly, and renters insurance can help protect against any unforeseen expenses.

Renters insurance and homeowners insurance are similar – both protect your possessions – with one key difference. Homeowners insurance also protects the structure – the building itself. Renters insurance primarily covers belongings. You also generally get some liability coverage, but the policy doesn’t protect the apartment. The building’s landlord will have their own insurance to cover damage to the building.

Renters insurance isn’t legally required — in fact, 56% of young adult renters don't have coverage. However, it’s not unusual for landlords to require renters insurance as a condition of signing a lease. They are allowed to do this, so when you’re filling out a rental application be ready to buy renters insurance if you haven’t already.

Technically, yes. You may be able to add a roommate to your renters insurance policy. However, think hard about it before you do. You’ll essentially be doubling (or more) the amount of belongings that are being covered, so you might reach your coverage limits quicker. Plus, if you or your roommate move out, you’ll need to untangle your policies – especially tricky if you don’t leave each other on good terms. Renters insurance is affordable, so it’s worth each roommate having their own renters insurance policy that covers their own belongings.

A renters insurance home inventory is an inventory of everything you own that would be potentially covered by your renters insurance policy. This is helpful when filing a claim, as some insurers may request proof of ownership of an item. There are many home inventory apps that let you photograph and document items straight from your smartphone.

Compared to other types of insurance, renters insurance is relatively cheap. The cost of a renters policy depends on the collective value of the property you’re insuring, where you live, your credit score, and the type of policy you buy (explained below). The Insurance Information Institute reports the average renters insurance policy costs $300 a year.

A standard renters insurance policy is made up of a few different types of coverage. Here’s an overview of how renters insurance works:

Personal property damage coverage – Replacing or repairing belongings that are damaged or stolen.

Personal liability coverage – Legal costs from damage or injury.

Medical payment coverage – Medical expenses for anyone injured in your apartment.

Loss of use coverage – The cost of lodging, food, and more if your apartment becomes unlivable due to damage.