How does renters insurance work and is it worth it?

Renters insurance covers your personal belongings if they're stolen or damaged by fire, water, or other covered events. It also includes liability protection if someone gets injured in your apartment and you're sued, plus it can cover temporary living expenses if your place becomes uninhabitable. You pay a monthly or annual premium, and if something happens, you file a claim and get reimbursed after paying your deductible. It's almost always worth it because it's cheap, typically $15 to $30 per month. Your landlord's insurance only covers the building itself, not your stuff. One theft, fire, or lawsuit could cost you thousands, so the math strongly favors having it. Most people are underinsured simply because they underestimate how much their belongings are actually worth.