Renter's insurance is a special policy for people who have valuable possessions such as furniture and electronics but don't own the place where they live. The owner of the building is responsible for losses to the property and building. He or she is not responsible to protect your stuff if you are a renter. You, not the property owner, are responsible if you hurt someone or damage someone else's property, or if someone is hurt in your unit. Renters' insurance provides protection of your possessions and pays others for injuries or damage you inadvertently cause.

Deciding on renters' insurance is a judgment call. One thing can be safely assumed: Landlords are in the business of collecting income on rental properties-not insuring tenants-so it's necessary to make your own arrangements for coverage. Landlords insure the buildings. If you want your belongings insured, that's your job.

Finding out if you're covered
As a student, the first thing to determine is if you need a new renters' policy at all. You may already be covered under your parents' homeowners' policy. Ask them if their policy extends to your personal belongings while attending school. If it does, read the policy carefully to find out if there are limitations in the types of possessions covered. It you aren't sure what it says, call their insurance agent and ask.

Take the time to investigate how changes in your living conditions can affect your coverage under a family homeowner's policy. Your parents' insurance may cover your belongings as long as you live in a dormitory, but not after you move off campus to a rental house or apartment. One other thing to check in particular is their policy's coverage of laptop computers. Laptops tend to be stolen more frequently than other items, so some family homeowners' policies exclude them.

What it protects
The primary reasons for having renters' insurance are to protect you from:

• Loss of personal items to theft or vandalism
• Loss of personal items from your car
• Loss of possessions due to fire, smoke, lightening, wind, leaking water, freezing temperatures, and other acts of nature
• Liability claims filed against you by someone who is hurt on the property and accuses you of negligence
• The medical expenses of someone who is hurt in your rental unit

How much is needed
Your renters' insurance needs will depend to a large degree on the total value of your personal property. Most policies require you to have at least $10,000 of protection.

Another factor is the decision you make about personal liability coverage. Liability coverage refers to the sum of money an insurance company will pay to cover a lawsuit filed against you by someone who is accidentally hurt in your rented house or apartment. To plan for liability insurance, you need to determine a coverage amount based on your best estimations of need.

Renters' insurance is available from many companies for reasonable premiums-typically under $200 per year-and chances are likely that you'll need no more than a few thousand dollars in total coverage for your possessions.

Document first
You're off to a good start if you have been careful to save your receipts for purchases such as computers, electronics, and jewelry. Document the value of your belongings as follows:

1. In a notebook, list the purchase value of your most expensive belongings.
2. Record the serial number for items such as televisions and stereos.
3. Take pictures of your belongings and attach a copy of the purchase receipt to each photo.
4. Add up the value of your belongings.
5. When you have completed these tasks, store the notebook in a safe place away from your living space (such as at your parents' house).

Decide on primary needs and add-ons
The following considerations will help you arrive at a sensible decision regarding renters' insurance:

1. Think about coverage limitations if you own high-value property. Renters' policies limit the amount payable for certain types of possessions. These vary, but typical limits are $1,000 for jewelry and $3,000 to $10,000 for computers.
2. Consider add-ons. Valuable jewelry usually requires a special rider or "floater" to provide coverage beyond the limits of the policy. A floater on the policy insures items such as rings or watches that "float" with you as you move from location to location.
3. Discuss the liability question with your landlord. To be "liable" for something that happens in your rental, such as an injury, means that you hold some level of responsibility for the incident. Ask what level of liability the landlord's property/liability policy covers. Also, make sure you understand issues of personal responsibility that may be written into the lease, such as your signed agreement to clear sidewalks of ice and snow.
4. Ask yourself how much you are willing to spend from your own savings to replace lost items. This will give you a reference point from which to compare renters' insurance deductibles. The deductible is the preset amount you agree to pay on a claim before insurance payments kick in.
5. Consider buying your renters' policy from the same company that carries your car insurance. You may be eligible for a discount.

Kinds of policies
Renters' policies typically combine loss protection with liability protection, and offer more than one method to determine the value of property when claims are settled. Some policies also cover losses or unexpected expenses related to travel and temporary living arrangements. Deciding which property valuation method is right, and whether you need coverage under special circumstances, are two questions to think about when customizing a policy to your specific needs.

Loss protection: the value question
Like cars, personal belongings depreciate in value over time. The wear and tear on all cameras, stereos, computers, electronic gadgetry and other items eventually reduces their worth to a fraction of their purchase price. Because of this, renters' claims are often settled by determining the depreciated, or "actual cash value," of the loss. Insurers use special depreciation schedules to calculate these values.

If the belongings you lose are more than a few years old and have depreciated, you may not get a very big claim check under the actual cash value method. Your alternative is to buy a policy that determines the value of a claim according to the "replacement cost" method. These policies are more expensive than actual cash value policies, but reimburse you for the cost of a brand new replacement item.

An advantage of replacement cost policies is that they generally cover the purchase of a more expensive item if the one you lost is no longer manufactured. For example, if the particular model of digital camera that was stolen from you has been replaced by a more sophisticated version, your replacement cost policy may pay for the more advanced model.

Coverage for other losses and expenses
While loss and liability coverage are the central reasons for obtaining renters' insurance, some policies extend protection to additional areas. Call you your insurance agent and ask about the following:

• Flood insurance. This protection is normally excluded from your basic renters' policy. If you live in a flood-prone area, ask your agent how much it will cost to include flood insurance as an add-on or as a separate policy.
• Coverage for unexpected living expenses. If a water pipe breaks in your rental house and the landlord needs to call in workers to replace the ruined carpet and linoleum, you'll have to find temporary living quarters. Some renters' policies will pay for your stay in a motel or other location while the rental is being repaired.
• Travel-related property loss. If an airline loses your luggage, certain renters' policies will allow you to file a claim.