Renters Insurance: Do you need it?

I was talking to a friend today who rents a house with two roommates. In the course of the discussion, it came up as to whether she had renters insurance. (Okay, that doesn't come up in conversation with normal people, but I am an insurance geek, remember? It comes up in my conversations with people.) She answered that she had no renters insurance.

Does she need it? YES! Do you need it? YES! Why?

Renters insurance is simple. It pays for your contents if they are damaged by one of 17 (usually) named events (called perils in the insurance business.) In other words, if your property is stolen, destroyed by fire, etc... the insurance company will pay to replace the items.

Also, renters insurance provides you with liability coverage. So, if your negligence injures someone, then the policy will pay any amount you are responsible for. In other words, if you injure someone because of something you do, they will be able to be compensated by the insurance company and not by you personally.

Renters insurance is relatively cheap. A good policy is about $200 per year. It is something ever renter should buy.