[Blog] Differences Between Homeowners & Renters Insurances
Owning a home versus renting an apartment or other type of property is quite a different experience, including the type of insurance you'll need. Before you start researching insurance providers, understanding the differences between homeowners and renters insurance is essential to ensure you choose the best coverage possible. This guide will help you learn more about the various features of both types of insurance and what to expect when you shop for and enroll in an insurance plan.
Differences in Coverage
The most significant difference between homeowners and renters insurance is the coverage you'll receive, but there are a few other differences as well.
- Homeowners insurance covers the actual dwelling or structure, while renters insurance does not.
- Generally, renters insurance premiums are much less expensive than homeowners insurance.
- Both insurance policy types cover the cost of replacing your belongings and should also cover the cost of additional living expenses if you need to leave your home temporarily.
- You must pay for renters insurance upfront out of pocket, while homeowners insurance is usually included in your monthly mortgage payment.
- If your home is damaged, the landlord or owner of the property must pay for repairs themselves if you're renting.
- Both insurance policies are typically active for one full year before requiring renewal.
- Many insurance companies will allow you to "bundle" your renters and homeowners insurance with other policies, such as car or motorcycle insurance, for a reduced price.
Homeowners Insurance Basics
All homeowners must have an active homeowners insurance policy to get a mortgage on a home. The premium is usually paid for as part of your mortgage and factors into your monthly mortgage payment. Homeowners insurance not only covers your personal belongings, but it also covers the actual structure of the home and any outbuildings (such as a shed or guest house).
Homeowners insurance will pay to repair or replace a home in the event of severe disasters, including fires, significant storms (such as a tornado or hurricane), and even crimes like breaking and entering or vandalism. It's important to note that if you live in an officially designated flood zone, you must pay for a separate flood insurance policy to protect your property.
The "dwelling" listed in a homeowners insurance policy refers to the home's structure, including all components like the walls, roof, doors, floors, and other areas. Other common "perils" that may affect homeowners include hailstorms, wind, lightning strikes, fallen trees, other fallen objects, vehicles colliding with the home, and water damage from frozen pipes or faulty plumbing.
Before you sign up for a homeowners insurance plan, read the fine print to know what's included and what isn't. Sometimes, you may need supplemental insurance to cover your swimming pool or valuable artwork and collectibles.
Renters Insurance: What to Know
Renters insurance is similar to homeowners insurance but costs significantly less and covers less. With renters insurance, your personal belongings are covered in the event of theft or damage, including everything from your furniture to your flatscreen TV and any appliances you purchase with your own money. Like homeowners insurance, you may need to pay for a supplemental plan if you keep anything valuable inside the property, like expensive jewelry or rare artwork.
If your home or apartment is damaged and you're renting, it's up to the landlord to have insurance covering the actual dwelling. However, many renters insurance plans will pay for you to stay in a hotel while the property is being repaired. The policy may also include per diem, which will cover the cost of meals while you wait to return to your home. If your property is damaged, your renters insurance should pay to replace it. Ensure you keep an inventory of your belongings, including any serial numbers, in case you need to file a claim.
Now that you know more about the difference between homeowners and renters insurance, it's easy to see both types of policies have unique benefits. Whether you rent or own, having insurance coverage is vital to protect yourself and your property.