Renters insurance can cover a lot

Most renters can acquire thousands of dollars worth of property and liability insurance coverage for less than $20 a month.

Yet, fewer than half of those renting either a home or an apartment have a renters insurance policy, according to the Insurance Information Institute.

The average renters insurance policy premium in the United States stood at $193 a year as of 2005, according to the National Association of Insurance Commissioners. But a 2006 Insurance Research Council poll determined that only 43 percent of all renters nationwide had renters insurance.

There are two types of renter's insurance policies. One is an actual cash value policy, which pays policyholders to replace their possessions minus a deduction for depreciation. The other is a replacement cost policy. This type of policy usually costs at least 10 percent more because it pays policyholders the actual cost of replacing their possessions, up to the policy limit.

Losses incurred by either a flood or an earthquake are excluded under standard renters insurance but can be purchased separately. Moreover, renters policies can be supplemented with the purchase of a floater, which offers broader coverage for expensive items, such as jewelry, silver and furs.

The best way to determine how much renters insurance coverage to buy is to conduct a home inventory, something that can be done easily by using the I.I.I.'s free, downloadable Know Your Stuff software. Users can go room by room, compiling a detailed list of all their personal possessions and the estimated value of each item.

Renters insurance is most commonly sold by companies that also offer auto and homeowners insurance and, as always, it pays to shop around for the best deal.

To save money on a renters insurance policy, consumers can:

* Increase the policy deductible from $250 to $500. The deductible is the amount policyholders must pay out-of-pocket before their insurance coverage takes effect. Increasing the deductible can result in premium savings of up to 15 percent,

* Install smoke detectors, dead-bolt door locks and a fire extinguisher to qualify for premium discounts, and

* Stop smoking. Some insurers offer reduced premiums to nonsmokers because smoking is one of the leading causes of residential fires.