[VoraciousReader]

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Renter's insurance is very cheap (less than $100 a year), and basically will replace all your belongings in case of burglary/fire.

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Sorry to be "that" poster, but it's an important difference when you're talking about renter's insurance. Unlike most homeowner's policies, most renter's policies do not cover simple theft. When a person steals something from you without breaking into your home it is considered theft as opposed to burglary. Most common occurrences are when you invite someone into your house (which includes large parties where you may not know everyone in attendence, but they have your consent to be there) or when you leave your doors/windows unlocked. There is a lot of potential for fraud in renter's insurance, so most companies require evidence of forcible entry before they will pay out a claim.

A good renter's policy is a must, in my opinion, and as others have mentioned, it is very very cheap. Most people underestimate the value of what they own. They think: "Well, I have a big TV for a couple grand and my computer and some pots and pans. If I lost everything I could replace it for less than 5,000 dollars." When you have a fire (which for apartment dwellers is always a greater possibility because you don't have control over what the idiot next door does) you may have to replace everything: towels, shirts, socks, toilet brush, trash cans, sheets, bedspreads, mattresses, shoes, wallet, watch, dishes, silverware, spices, etc. Stroll through Bed, Bath, and Beyond, or even Wal-Mart, and think about purchasing a new one (even the cheapest you can) of everything you have in your home. It adds up really quickly. And that's before you get to electronics.

Also, a renter's policy will often pay for you to stay somewhere else, which most people will be surprised to learn their landlord is usually not responsible for. The Red Cross will give you a few days worth of vouchers at the local Best Western and then you are on your own.

Perhaps even more important, the liability portion of the policy also protects your net worth (and bankroll) in the event that YOU are the idiot next door and you leave your stove on and your landlord's insurance company decides to sue you.

Edit: It is very important that you shop for "replacement cost" coverage for your personal belongings. "Actual cash value" coverage is virtually worthless.