Imagine you’re renting your apartment and a ceiling leak in your bedroom damages many of your most expensive items, and forces you to stay at a hotel for a few nights while repairs are made. How will you pay to replace those items and afford last-minute accommodations?

This is where any savings you’ve built up, including an emergency fund, can lend a helping hand. But many replacements and accommodations are expensive and if you don’t have enough saved to cover the entire bill, you’re basically out of luck (and money).

That’s why Renters Insurance can be well worth the small monthly cost. Of course, an extra monthly expense is yet another thing to budget for. But below, CNBC Select covers why renters insurance can be worth it and how to make it as affordable as possible.

Renters insurance is a type of insurance policy that covers tenants in the event of personal property damage and personal liability up to a certain amount (called the coverage limit). You’ll pay the insurance premium and file a claim anytime you experience a covered loss. You’ll be reimbursed up to your coverage limit once your expenses exceed your deductible.

For instance, if you have a $500 deductible and that leaky pipe damages $2,500 worth of furniture, you could be reimbursed for $2,000.

Renters insurance covers three areas:

• Personal property: Covers the replacement cost or reimburses you for the value of things such as clothing, furniture, electronics, jewelry and other personal belongings
• Personal liability: Pays for legal fees or medical expenses when someone is hurt in an accident or their property is damaged and you’re found at fault
• Loss of use: Pays for additional expenses (hotel, restaurants, etc.) when you can’t live in the apartment because of a covered event, such as fire, vandalism or water damage from leaky pipes

You can also add additional coverage for items that aren’t covered, like high-value jewelry, camera equipment and art.

Of course, your policy won’t cover everything. Renters insurance typically won’t help you out with earthquakes, floods, damages to the home itself, pest infestation, damage to your roommate’s belongings (if they aren’t listed on your policy) and liability for a home business.

Make sure you pay attention to the coverage limits. Adding more coverage usually increases your monthly premium, but don’t let that stop you from getting the coverage you need for your belongings.

There are a number of reasons why renters insurance policy is almost always worth the small monthly cost in premiums.

Standard coverage usually comes at an affordable price

Nobody wants to add another bill to pay each month, especially when you’ll rarely — if ever — see any benefit from it. But if someone gets injured in your home or the pipes in your wall explode and turn your living room into a swimming pool, you’ll wish you had a renters insurance policy.

Lemonade offers renters insurance starting at $5/month, so for one small coffee a month you can protect your belongings. Your monthly payment will be adjusted depending on how much coverage you choose and whether you add extra coverage for high-value items but it still offers some of the lowest premiums on the market.

Bundling renters insurance with other policies can help you save money

Most insurance companies give you a discount for bundling policies — in other words, taking on two or more policies with the same insurer can help you save money. For instance, bundling a USAA renters insurance policy with an auto insurance policy gets you a 10% discount with USAA, which primarily caters to current members of the armed forces and veterans.

Replacing your damaged items out of pocket will cost more

Costly damage to personal belongings can force you into debt to replace them if you don’t have enough savings. But when you use your insurance policy to pay for a covered item, you avoid footing the entirety of what could be an astronomical bill. That’s more than worth the few bucks a month it costs for a policy.

It could be required by your landlord

If your building’s landlord requires tenants to have renters insurance then you’ll have no choice but to get a policy anyway. And don’t think that whatever insurance policy your landlord has to cover the building will protect you or your belongings. Without a renters insurance policy, you and your belongings are exposed to potential financial ruin.

It can help you pay medical and/or legal bills for accidents that occur in your home

If someone else gets hurt while in your apartment (or on your property) and incurs medical bills, your renters insurance coverage typically helps you pay the costs. This can save you from having to reach into your own savings to pay for the entirety of someone else’s medical care (even if it was just an accident).

You may be temporarily unable to inhabit your current apartment

If your current apartment is uninhabitable due to a covered loss, renters insurance can help you pay for hotel accommodations (usually up to a certain amount) until you’re able to live in your unit again. This is called loss of use coverage. This makes picking up and temporarily relocating way more affordable than it otherwise would have been.

Again, hopefully you never have to use your renters insurance policy and it’ll just be another monthly bill — one you keep as small as possible.

Bundling your renters insurance with another type of insurance product from the same insurer — whether it’s auto insurance, boat insurance, RV insurance and more — can land you a discount. The discount, of course, can vary depending on the company you go with.

Before signing up for a policy, you should also consider what coverage you actually need. Taking on too much coverage or getting coverage for add-o ns that don’t really apply to you can inflate your monthly premium. On the other hand, you don’t want to pass on coverage for high-value possessions just to save a few bucks.

So you should take stock of your possessions before you select a coverage amount. This will help you figure out exactly what you have and what needs protecting so you can get the proper level of coverage.

When you consider the catastrophic consequences you could suffer from not having renters insurance, paying a modest amount for a policy seems like the smart move. Just make sure you figure out how much coverage you actually need and bundle where you can to take advantage of discounts.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every renters insurance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of renters insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best renters insurance providers.

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