Homeowners are not the only people hit by unexpected losses. People renting homes and apartments also have their worldly possessions wiped out by fire, flood or theft. Victims say the real pain, more tender than the actual disaster, is not being able to replace those possessions.

While nearly all homeowners carry some sort of insurance coverage, most insurance agents say that only about 25 percent of all renters purchase an insurance policy for their belongings. Often, seniors who have sold their family home and now rent forget, or shun, renter’s insurance while college kids and recent graduates usually think their possessions are not worth insuring.

Who buys renter’s insurance? Is there a point below which your valuables aren’t valuable enough to insure? What does it cover and what doesn’t it cover?

Annual renter’s insurance runs about $250 a year for up to $20,000 in replacement cost for possessions and includes $100,000 in liability protection. Less expensive standard policies are available, but the depreciation factor can eat away the value of most items.

Renter’s insurance typically covers household contents and personal belongings against several “perils” including fire, theft, wind and hail. Flood insurance coverage usually is separate and independent of the standard policy. While consumers can purchase this coverage directly from a homeowners insurance agent, the policy typically is provided by the Federal Flood Insurance Program http://www.fema.gov/nfip

There’s no doubt that the average person significantly undervalues his belongings. People are simply worth more than they think they are. Go to your closet. There’s very little hanging in there that’s worth less than $30. When you consider a few business suits, a heavy winter coat or two, wool sweaters from the folks – you can easily be averaging more than $50 a hanger even when you include that stack of ancient athletic sweatshirts.

According to the Insurance Information Institute, a national trade association financed by insurance companies, renters don’t have the constant reminders aimed at homeowners. For example, when you buy a home, you have the mortgage people reminding you that you need insurance in order to get a loan. Those reminders simply are not present for renters.

About one-third of all losses or damage claims to dwellings and contents are for less than $500. These losses frequently are as costly to process as large losses. In order to keep the costs as low as possible for larger setbacks, companies offer a deductible clause. This means the policyholder is responsible for all losses up to that amount. Generally, the larger the deductible, the less expensive the premium.

Not all companies share the same deductible philosophy for renter’s insurance. Karen Logan of Armed Forces Insurance ( www.afi.org), a company specializing in the insurance needs of military personnel and veterans, said AFI offers an annual, worldwide renter’s policy that carries no deductible.

“There are a few dollar limitations on certain categories of personal property, such as jewelry, furs and antiques,” Logan said. “However, the limits can be overcome by listing them on the supplemental ‘floater’ policy that gives you the same coverage with a zero deductible.”

AFI’s “floater” program is similar to a “schedule” offered by other insurance companies. A schedule usually is a list of expensive or unique possessions not covered in the regular policy. It acts as an addendum to the general policy and sometimes can cost more money. For example, if you drop your camera into the lake, and the camera was listed on your schedule, the $200 deductible would not be subtracted from the replacement cost.

Logan said the personal liability coverage included in all renter’s insurance packages alone is worth the cost of the premium. That’s because it protects the policyholder against bodily injury and property damage claims arising from property that policyholder owns or leases. It also protects policyholders from accidental damage they may cause to the person or property of others. Legal defense costs and medical payment insurance also are included.

Insuring possessions for replacement cost usually costs more than standard coverage because of the depreciation factor in standard policies. For example, suppose a television set is stolen from your apartment. Although the set would cost $500 to replace, the standard policy would pay its current cash value, say depreciated to $300, less the policy’s $200 deductible. You collect just $100 for the stolen set and have to spend $400 to replace it. Replacement coverage would provide you with $300, assuming your policy contained a $200 deductible.

If you are renting a property, don’t expect the landlord’s coverage will bail you out of a personal loss suffered by theft, fire or flood. Do the research and cover yourself and your possessions. It may seem like a ton of cash, especially for folks on fixed incomes, but the alternative could be devastating.