Whether you rent or own your home, the property, as well as its contents, should be protected with insurance. For those who own homes, homeowners insurance can protect the home and the home's contents. If the home is a rental, the landlord would insure the property, while the renter is responsible for insuring the contents of the home.
Renters Insurance vs. Homeowners Insurance
Both homeowners and renters insurance require regular payments that can range from monthly up to one lump annual payment, and a policy must be in good standing in order to pay out on a claim. Both also require the payment of a deductible for claims, unless otherwise specified in the policy.
- Homeowners insurance covers the actual building you live in (and associated structures like garages).
- With renters insurance, the landlord will be expected to have coverage on the building while your insurance will cover your personal property.
- When taking out a mortgage, most lenders will require you to take out homeowners insurance.
- Renters insurance is taken out by tenants to cover personal property and liability owned by the tenant and not the responsibility of the landlord.
Renters insurance is for occupants who do not own the property but want to protect their personal belongings that are in the home or on the property. It is important for renters to note that the property owner's insurance policy does not cover them, and their items are lost in the event they are damaged or destroyed. Renters insurance policies will reimburse a renter for the replacement cost of property that is lost or damaged while on the property.
Landlords may stipulate or recommend that tenants obtain their own renters insurance in the lease agreement, absolving the landlord of responsibility for lost or stolen items belonging to tenants.
A homeowners insurance policy is taken out by the owner of the home. A property owner is not obligated to insure his or her property unless there are special circumstances, but a homeowner who has a mortgage is usually required to take out an insurance policy.
Renters should never assume a landlord's insurance will cover anything they own in their rental or on their rental property.
The amount of insurance generally covers the cost to replace the home in the event of a total loss, and additional insurance can be added to cover the replacement value of the items in the home. If a home costs $200,000 to rebuild and the items inside the home cost $150,000 to replace, a homeowner who wanted to cover everything would need to insure the property for at least $350,000.
The Bottom Line
Most standard homeowners insurance policies will have personal property coverage as well, and it is becoming more common for landlords to require their renters to buy renters insurance. Since you are insuring a more substantial asset with homeowners insurance, the expected cost will be higher as well. Most homeowners and renters insurances also have liability coverage associated with them.