Whenever the topic of insurance for property damage or theft comes up, it commonly gets directed toward homeowners. But renters of houses and apartments need insurance, too. This is commonly referred to as renters insurance.    

The landlord, of course, is responsible for damage to the building through the ordinary-covered perils of fire, theft etc. But whatever your landlord does to protect his or her interests will not work to cover your contents of any liability issues that may arise while you are living in that rental unit.   

Because you are not covering the building, renters insurance is also a whole lot cheaper than homeowners insurance. The basic renters insurance will cover the interior of your apartment, meaning carpets, walls, built-in bookcases or cabinets, kitchen appliances and any other contents that you'd like to cover. The amount of coverage you may buy is similar to how it works for homeowners. You can have a large deductible or a small deductible. You may insure the property for a certain amount, depreciated value or full replacement cost. Look at prices for the full range from low to high benefit coverage and make your decision based on your budget for coverage and the value and quality of your contents.   

Beyond the “stuff” part of renters insurance, there are other major components worth noting. First is the liability part. Replacing your stuff from a fire would sure be costly, but it may pale in comparison to a liability that could arise if anything in your apartment was a cause of the fire. And like homeowners insurance, that liability coverage may extend to you for liabilities that arise outside of the rental property. This liability component may also be an integral part of your overall umbrella liability policy. Remember that your umbrella liability policy only kicks in and pays benefits after the maximum possible underlying limits from homeowners or auto coverage are exhausted. 

Another important component is alternate housing insurance. If your dwelling becomes uninhabitable because of a covered peril, you will be covered for extra expenses incurred while your residence is repaired or you find alternate housing.        

John P. Napolitano is the CEO of U.S. Wealth Management in Braintree, Mass. He may be reached at jnap@uswealthcompanies.com. For online discussion and more information, go to www.makingcentsblog.com.