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This is one of the most important features of a renters insurance policy. Policies come in two flavors: one that covers the value of your personal possessions minus depreciation, or one that covers the replacement cost of items.

• Replacement cost: This type of policy is meant to provide the policyholder with enough money to replace the lost, damaged or stolen item based on its value when it was new.
• Actual cash value: Actual cash value takes into account depreciation and pays less for used items that experience wear and tear.
• Cost comparison: Actual cash value policies will usually have lower premiums to compensate for coverage that pays out less for lost, damaged or stolen property.

In the event of an accident or damage to your apartment or rental home, some renters policies provide money for additional living expenses to compensate for the unexpected costs incurred if the situation forces you to live elsewhere, temporarily.

• Hotel reimbursement: Some policies will cover the cost of a hotel stay while your home is being repaired or cleaned.
• Meal reimbursement: Meals are often covered during the time you are forced to be out of your home.
• Additional living expenses limits: Many policies do have maximum dollar limits, time limits or other rules that may apply. Be sure to understand these limits.

Liability protection is generally included in your standard renters insurance policy, in addition to coverage for personal possessions. Liability protects policyholders - and their assets - from lawsuits if someone is injured in their home or if policyholders are accused of property damage. The coverage typically includes payment to defend policyholders in court and for damages awarded by the court.

• Accidents in your home: This protects the renter in the case that a guest, repair or cleaning person or other visitor is injured while in a rental and file a lawsuit against the renter and their assets. Many renters policies also include no-fault medical coverage, which pay for health care when someone gets hurt in the policyholder’s home - with the goal being to avoid a lawsuit.
• Injury caused by pets: If a visitor is bitten by a renter’s dog, liability coverage will help protect the policyholder. However, not all dog breeds are covered and it is essential to check.
• Cost vs. coverage: Although most renters policies include liability coverage, the amount provided might not be high enough for some individuals. One option is to increase the liability limits on your renters insurance, and another is to purchase a separate umbrella liability policy, which is relatively inexpensive and could kick in with millions of additional coverage on top of primary coverage.

Also known as worldwide coverage, this type of coverage will provide replacement money for belongings lost outside of the rental. There may be limitations on what circumstances are covered, so it is important to read the policy carefully.

• Off-premises damage: This type of coverage includes situations such as a bike stored in an apartment building’s basement that sustains water damage due to broken pipes.
• Vandalism and theft: Personal items stolen from a vehicle may be covered under a renters insurance policy.
• Lost luggage: Some renters insurance policies will cover items lost due to airline baggage problems.

A policy is only as good as the company that issues it. Potential policyholders should pay attention to customer reviews on independent review sites and conduct Internet research on a company's reputation and rating. Calling into an insurer’s customer service line may give potential customers a feel for how they will be treated if they purchase a policy.

• Customer reviews: Online review sites are a great place to learn about how a company treats its customers. Be sure to read a variety of both positive and negative reviews to get a balanced picture.
• Claims process: Customer service should be able to explain the insurance company’s claims process. A simple and clear claims process will make life easier should a disaster occur.
• Company history and/or projects: The company website will likely have information on the history of the company, as well as any community or charity projects in which it is involved.

Cost is usually the ultimate factor when choosing an insurance policy. There are many ways to work with a company to keep costs low, while still receiving the desired coverage.

• Multi-policy discounts: Many companies who offer auto or life insurance will also offer renters insurance and a multi-policy discount for holding more than one policy with the same company.
• Discounts: There are a plethora of other discounts available, - for instance, for homes with smoke detectors and security systems, for paying premiums in one lump sum, for seniors and for individuals with good credit - and consumers should always ask a prospective insurer about which discounts they may be eligible for.
• Exclusions and limits: It’s important to know what you’re paying for, and if paying a little more might be worth it. Renters insurance usually covers a wide range of disasters, but a policy may exclude some, like flood or earthquake. If that’s the case, decide whether paying more for an additional policy is worth it. Likewise, if you own valuables such as jewelry, high-end electronics or firearms, a renters policy’s limits might not be high enough. A separate “floater” policy might be needed to protect these items.
• Location: Of course, the cost of a policy always depends on the value of the items being covered, but location also plays a role in the final cost. In some large cities, renters policies may cost more than in smaller cities.