For those who have never bought homeowner’s or renter’s insurance before, the differences between the two insurance types may not be obvious at first. If you’ve never purchased renter’s insurance but you plan to lease out a home that you already know, it’s especially useful to understand what these differences are. In the article below, we’ll explain what you can expect in terms of coverage and cost between renter’s and homeowner’s insurance policies.
Both policy types are paid monthly and serve the purpose of covering damage. But that’s about where the similarities end.
Coverage
Homeowner’s insurance is a mandatory insurance policy that all homeowners are required to have. It covers:
- The house and adjoined buildings, like garages.
- Personal possessions.
- Personal liability if someone is hurt or their items are damaged on your property.
- Medical expenses as a result of a catastrophe that affects the home.
- Temporary lodging costs if the damaged dwelling is unsafe to live in.
Renter’s insurance policies can vary wildly in terms of what they cover. They can cover everything that is covered by homeowner’s insurance, with the exception of the property itself.
Cost
Homeowner’s insurance is substantially more expensive than renter’s insurance. This only makes sense, since the dwelling itself is the most valuable thing to insure. Renter’s insurance can actually be quite affordable, to the point that many renters are prioritizing it when they sign a lease to live on someone else’s property.
Requirements
Homeowner’s insurance is 100% mandatory for those who have purchased a home. This is because the lending institution wants to make sure that their investment is being protected. Renters cannot take out homeowner’s insurance. For as long as they live in the insured dwelling, the homeowner’s insurance policy will cover damage sustained by the property.
Renter’s insurance, on the other hand, is never required except by the property owner. Not every property owner who leases out their home will mandate tenants have this type of insurance, but an increasing number of landlords are doing so.
Renter’s and homeowner’s insurance policies are both incredibly useful and effective at helping everyone involved to save money in the event of a disaster. While renter’s insurance may not be mandatory for signing a lease with a property owner, more and more renters are seeing the virtue in getting such a policy. Oftentimes, renter’s insurance can even be bundled in with your existing auto insurance policy!