As a renter, there are many household expenses you simply don’t have to worry about — maintenance, property taxes and so on. However, while it might be tempting to avoid yet another bill, insuring your belongings is just as important for renters as it is for homeowners. But, while that may be true, a significant number of renters are without insurance, leaving themselves vulnerable to major financial loss. According to a 2014 Insurance Information Institute poll, 95 percent of homeowner’s have insurance (a condition of most mortgages), but only 37 percent of renters are insured.

Here are five reasons every tenant should have renter’s insurance:

1. It’s The Only Way You’re Covered.
You may believe that your landlord is responsible for losses due to catastrophic events like fire or a burst pipe, but unless the issue was the result of negligence, your landlord’s policy only covers damage to the physical structure, not to your personal possessions. Having a renter’s policy is the only way to make sure you’ll be able to replace your belongings — everything from your bathrobe to that rug that really ties the room together — can be replaced in case of peril, theft or vandalism. Pro Tip: More and more landlords and management companies are requiring tenants to carry renter’s insurance. Be sure to check with your landlord before signing a new lease.

2. It’s Cheaper Than You Might Think.
If you think you can’t afford renter’s insurance, be assured that policies are actually quite affordable. The New York Times estimates a sizeable $50,000 of coverage in the New York area costs a modest $300 per year — less than a dollar a day. You can also rest easy knowing that your premiums aren’t likely to jump in price anytime soon. While homeowner’s policy costs have soared 42 percent over the last 10 years, rental policies have actually decreased slightly in the same period. Pro Tip: Keep in mind that your home’s safety features could provide a nice price break, so make note of smoke detectors, security systems, fire extinguishers and proximity to fire hydrants when gathering quotes.

3. It Covers More Than You Might Think.
Most policies cover a wide array of perils including fire, theft, most storm damage and so on. However, just like most homeowner’s insurance, rental policies may not cover flooding caused by weather, earthquakes or wind damage in hurricane-prone areas. Be sure to add coverage for those scenarios if necessary in your region. As an added benefit, under most policies, your belongings are protected not only while they’re in your home, but also while you’re commuting, traveling and so on. Also, in addition to your belongings, many policies will cover the costs of living expenses and alternate housing if your home should become uninhabitable. Pro Tip: When comparing policies, make sure you’re comparing apples to apples when it comes to coverage limits, which can vary significantly from company to company.

4. Your Stuff is More Valuable Than You Might Think.
If you are living a simple, pared-down lifestyle, you may think that the price of renter’s insurance doesn’t make sense for you. But once you calculate what it would cost to replace every single thing you own, you’ll likely see the value. Even if your lifestyle is quite modest, your one prize possession, say that MacBook Pro you received as a graduation gift or the ring your grandmother gave you last Christmas, probably costs far more than a year’s premiums. Pro Tip: Be sure to talk to your insurance agent about equipment used for business or any jewelry worth more than $1,000, as those items may require additional coverage.

5. You Are Responsible for More than Your Stuff.
Your possessions aren’t the only thing you need to protect. If someone is injured in your home or if your actions inadvertently cause damage to someone else’s home, you could be liable for the costs. If serious enough, we’re talking the kind of bill that can drain your life savings in the blink of an eye. Most renter’s policies include around $100,000 of liability coverage and up to $5,000 in medical expenses. Speak to your insurance agent if you need higher limits. Pro Tip: Damage or injury caused by your pets may also be covered by a renter’s policy. Check with your agent for details.

how to

Three easy steps to get covered:

Getting renter’s insurance is really quite simple. Follow these three easy steps, and you’ll be well on your way to protecting your belongings.

1. Prepare an inventory of everything you own with an estimated replacement cost.
This will determine the amount of coverage you need. It’s important to keep in mind that, if the worst were to happen, you might need to replace every item in your home. Frequently underestimated categories include clothing, outdoor furniture and kitchen equipment. The Insurance Information Institute has a great online tool for creating your inventory at Know Your Stuff.

2. Determine your needs and budget.
At this point, you’ll need to determine whether you want to secure a cash value policy, which factors depreciation into the value of your belongings, or a replacement value policy, which is more expensive, but will pay the actual cost of replacing your items. Next, select additional coverage you require for disasters, high-value personal property, business equipment and merchandise, or pets. Lastly, determine your budget for the premiums and deductible. Like all insurance, the higher you set the deductible, the lower your premiums. Just make sure you can actually afford that higher deductible if the worst should happen.

3. Gather quotes from at least three insurance companies.
You should first speak to the company or agent that handles your auto insurance or any other policies you may have. Frequently, they’ll provide a discount for the additional rental policy. Check online for quotes from other reputable companies. NerdWallet has a nice recap of some of the best firms in several categories.

Once you select the policy that works for you, you’ll realize that the small investment is worth the huge peace of mind that renter’s insurance delivers.

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