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 cover the home and its contents. If the home is a rental, the landlord would insure the property, while the renter would be responsible for insuring the contents of the home.

Homeowners Insurance vs. Renter’s Insurance

Both homeowners and renter’s insurance require regular payments, usually either monthly or as one lump-sum 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.

Key Takeaways

  • Homeowners insurance covers the actual building you live in (and associated structures such as garages).
  • With renter’s 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.
  • Renter’s insurance is taken out by tenants to cover personal property and liability owned by the tenant and not the responsibility of the landlord.

Homeowners Insurance

A homeowners insurance policy is taken out by the owner of the home. The amount of insurance generally covers both the cost to replace the home in the event of a total loss and the personal property in it, such as furniture, appliances, clothing, jewelry, and dishes. 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.

Renter’s Insurance

Renter’s 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 in the event that they are damaged or destroyed. Renter’s insurance policies will reimburse a renter for the replacement cost of property that is lost or damaged while on the property. It can also extend to means of transportation, covering items stolen from your car or a bike stolen while you were at work.

Renters should never assume that a landlord’s insurance will cover anything they own in their rental or on their rental property.

The Bottom Line

A property owner is not obligated to insure their property unless there are special circumstances, but a homeowner who has a mortgage is usually required to take out an insurance policy. Landlords often stipulate that tenants obtain their own renter’s insurance in the lease agreement. As you are insuring a more substantial asset with homeowners insurance, the cost will likely be higher than for rental insurance. Most homeowners and renter’s insurance policies also have liability coverage associated with them.