Are renters and homeowners insurance coverage the same?
While homeowners and renters insurance both provide protection against the unknown, they do have similarities and differences. Both policies cover your personal property if it’s damaged or destroyed by a risk stated in your policy. Some of the most common covered risks are fire, theft, and falling objects. However, renters insurance is a financial protection for those who rent their home while homeowners insurance is in place to protect a homeowner who owns their home. The major difference between the two policies lies in the type of property damage covered. Homeowners insurance protects the structure of your home and other structures on your property, from the same perils. Let our team of licensed insurance agents in Ohio, Maryland, West Virginia, and Indiana work with you to help you decide which coverage options are best for your situation!
Definition of homeowners insurance.
Homeowners insurance contains the same liability coverage and loss of use coverage that renters insurance does in addition to protecting the structure of your home. A Homeowners policy protects you financially if something out of your control happens to your home. It also covers any damaged or stolen personal items, the cost of a hotel stay if your home is damaged, and legal expenses if you are sued. Your homeowners policy is made up of six basic coverages that each serve a specific purpose and have a maximum payout limit. These include:
- Dwelling Coverage: Covers damage to the structure of your home, such as your roof, foundation, built-in appliances, cabinets, and any attached structures.
- Other Structures: Covers damage to detached structures on your property, such as your garage, shed, above ground pool, or fence.
- Personal Property: Covers the cost of damaged or stolen personal belongings.
- Additional Living Expenses: Covers the costs of hotel stays and restaurant meals if your home is being repaired or rebuilt after a covered risk.
- Personal Liability: Covers legal and medical expenses if you are held liable for injury or property damage to others, for example, if your dog bites a neighbor.
- Medical Payments: Covers another person’s medical bills if they are injured on your property.
Learn more about the different types of homeowner’s insurance.
Most mortgage companies require homeowners insurance coverage.
Purchasing a new home is a large expense so it’s no surprise that many people take out a mortgage. If you have a mortgage, your lender is most likely going to require that you have homeowners insurance. They will often require proof of insurance when you purchase the home. This is because they want to make sure that their financial investment in your home is protected if it’s damaged or destroyed by certain risks.
Learn more about how much homeowner’s insurance you might need for your new home
What is renters insurance?
Renters insurance is a financial protection for people who rent the home they live in. While homeowners insurance covers both your personal belongings and the structure of the home, renters insurance only covers your personal belongings. Those who rent their homes usually do not need coverage for the structure of their home because they don’t own it.
Just like homeowners insurance, renters insurance will cover your personal property if it is damaged by a risk covered in your policy. In addition, renters insurance can help pay for hotel stays, restaurant meals, and a laundromat if your home is no longer safe to live in because of damage from a covered peril, such as a fire. Renters insurance will also protect your personal liability if you are responsible for an injury or property damage to others.
Renters insurance has its limits, meaning that a basic policy will most likely not cover the complete cost of some expensive items that break or get destroyed. If you have expensive items you may want to consider adding an endorsement to your policy up to the amount of coverage for those specific items. Lastly, renters insurance does not cover damage occurred from natural disasters, pets, insects, terrorism, and acts of war.
Never assume your landlord’s insurance will cover your belongings.
Just as you purchase insurance to protect your belongings, landlords have insurance to cover the physical building structure that renters live in. This insurance does not protect the renter nor their belongings. Many landlords require tenants to have renters insurance before they will even let them sign a lease. Landlords are only responsible for the physical building itself, not the items their tenants possess. Additionally, renters insurance is one of the most affordable insurance policies you can buy with prices ranging anywhere from $15 to $20 a month.
How much renters insurance coverage do I need?
The amount renters insurance you need depends on your specific circumstances. When purchasing renters insurance it’s important to speak with a licensed insurance agent and to consider the following:
- How much personal property do you own?: You’ll want to make sure that your personal property damage coverage is enough to cover all of your belongings.
- Do I need additional coverage?: If you have expensive items such as jewelry or art, you may want to consider purchasing more than what’s in your policy limit. For example, if your limit is $2,000 and your wedding ring is worth $3,500, your insurer will only pay $2,000.
- How much liability can I afford to pay?: If someone injured themselves in your home and decided to sue you, would you be able to cover their legal and medical bills?
The bottom line.
Both renters and homeowners insurance is a beneficial purchase. You cannot predict what might happen in the future. Investing in protective insurance is a great thing to do for yourself, giving you peace of mind if anything happens to your house or personal items.
Disclaimer: This blog post is meant for general informational purposes only and may not reflect your specific policy.
About the Author: Alekha is an expert in the insurance space and has been with the Malhotra & Assoc. Insurance team since its inception. Alekha works to provide expertly written and researched content for the Maholtra & Assoc. Insurance agency.