Renters insurance does three main jobs. It protects your personal belongings against covered perils like fire and theft, it provides liability coverage if you're responsible for injury or damage, and it can pay loss-of-use costs if your home becomes temporarily unlivable.

What it doesn't do is insure the building — that's your landlord's policy, which won't cover your possessions. Many renters are surprised how affordable a policy is precisely because it leaves out the structure.

When comparing policies, check whether belongings are covered at replacement cost or actual cash value, and note any limits on high-value items like electronics or jewelry.