What's the difference between renter's insurance and homeowner's insurance?
Whether you rent or own your home, the property as well as its contents should be protected with insurance. For those who own homes, homeowner's insurance can protect the home and the home's contents. If the home is a rental, the owner of the home would insure the property, while the renter is responsible for insuring the contents of the home.
Both homeowner's and renter's insurance require regular payments that can range from monthly up to one 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.
Homeowner's Insurance Policy
A homeowner's 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 required to take out an insurance policy. 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.
Renter's Insurance Policy
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 are lost in the event 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.
Homeowner's and renter's insurance are similar in the fact that they are both associated with your dwelling. The main differences in these two types of insurance is what is included in the coverage and if you are required to have homeowner's or renter's insurance while living in the dwelling.
Homeowner's insurance covers the actual building you live in (and other structures, such as garages) while renter's insurance does not. With renter's insurance, the landlord will be expected to have coverage on the building while your renter’s insurance will cover your personal property. Most standard homeowner's policies will have personal property coverage as well. With homeowner's insurance, you are covering a more substantial asset (the actual home), thus the cost of insurance should be expected to be higher. Most homeowner's and renter's insurances will also have liability coverage associated with them.
If you mortgage your home, homeowner's insurance will almost always be required. Although it is becoming more popular that landlords require their renters to have renter’s insurance, having renter's insurance isn't always required when renting.
I hope this was helpful.
This is a relatively simple question that has already been answered. A homeowner's insurance policy usually covers structural components of the property. If it is a single family dwelling, the insurance usually will cover the exterior and interior structure. If it is a condo, the insurance usually will cover the interior components with the homeowner's association (HOA) carrying a master policy for the remaining structure. The contents of the dwelling may or may not be covered by the same homeowner's policy.
On the contrary, a renter's insurance policy usually only covers contents with the structure of the dwelling being covered by the homeowner's policy carried by the owner of the property (whether the owner is a person, corporation, trust, partnership, etc.). Because replacing the contents of the dwelling is usually cheaper than replacing the entire dwelling, the premium payments on a renter's insurance policy is a fraction of the premium payments for the homeowner's insurance policy on the same property.
When I was a homeowner, I had a policy to cover a number of areas of exposure. These ranged from structural damage such as flood and fire, to damage or theft of valuables like computers or expensive jewelry, to liability in case a guest of mine fell down the front steps and broke a leg.
Now I rent an apartment. It is the landlord’s problem if, unfortunately, there is damage to the structure. However, I do have renters insurance to cover damage to my possessions, or if somebody gets hurt on premises. I also have a home-office, so I have a separate policy to cover my business equipment, employees, and clients coming here on appointment.