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5 months ago · by · 0 comments

How do homeowners insurance vs. renters insurance differ?

Homeowners insurance and renter’s insurance both provide coverage against the risk of financial ruin of the policyholder against liability costs, property damage, medical payments to others, including the additional living expenses. Most individuals, not to mention first seekers, are having a hard time understanding the difference between home and renters’ insurance coverage, since, they are most likely the same. However, there is also a difference between these two forms of insurance. As a matter of fact, homeowners’ insurance coverage is for an individual who owns their home or apartment; on the other hand, renters’ insurance is usually available for tenants.

Homeowners’ insurance covers the structure and personal property of the policyholder, while renters’ insurance only covers the personal property. Renters’ insurance policy does not cover damages to the building.

How do homeowners insurance vs. renters insurance differ?

Homeowners insurance and renter’s insurance both provide coverage against the risk of financial ruin of the policyholder against liability costs, property damage, medical payments to others, including the additional living expenses. Most individuals, not to mention first seekers, are having a hard time understanding the difference between home and renters’ insurance coverage, since, they are most likely the same. However, there is also a difference between these two forms of insurance. As a matter of fact, homeowners’ insurance coverage is for an individual who owns their home or apartment; on the other hand, renters’ insurance is usually available for tenants.

Homeowners’ insurance covers the structure and personal property of the policyholder, while renters’ insurance only covers the personal property. Renters’ insurance policy does not cover damages to the building.

What are the coverages of renters’ insurance and homeowners’ insurance?

Homeowners’ insurance covers the dwelling, while renters’ insurance does not; other than that, almost all of the coverage is mainly the same. Homeowners’ insurance sustains five types of coverage, such as the dwelling, personal liability coverage, personal property coverage, medical payments, and additional living expenses. Renters’ insurance provides the mentioned coverage in homeowners’ except the dwelling coverage.

Type of CoverageHomeowners’ InsuranceRenters’ Insurance
Dwelling Coverage
Personal Property Coverage
Personal Liability Coverage
Additional Living Expenses (ALE)
Medical Payments

Homeowners’ Insurance and Renters’ Insurance Coverage:

Personal Liability, Personal Property, Additional Living Expenses, Medical Payments, and Dwelling Coverage for homeowners’ insurance

Homeowners’ and Renters’ policy has types of coverage that these two forms of insurance particularly sustain.

Personal Liability Coverage

Both homeowners’ and renters’ insurance provides coverage for the personal liability of the policyholder. It covers the policyholder’s from legal exposure to bodily injury and property damage to other individuals. For instance, that someone will sue you for an accident that caused him or her arm to get injured, liability coverage will cover the legal cost and the damages to the third-party.

Personal Property Coverage

Home’ and renters’ insurance covers the personal property of the policyholder against damages or theft. When you say personal property, it means anything from your furniture, including clothes. In purchasing homeowners’ insurance policy, coverage for property damage may be set as a percentage of the dwelling coverage, such as 50%; however, it can be adjusted before getting an agreement. On the other hand, if you renters’ insurance, the most vital process is to select your personal property coverage, as it is the primary coverage and a massive factor in your policy rate.

Additional Living Expenses (ALE)

Additional living expenses or also known as loss of use coverage protects the policyholder against financial ruin in the event you need to evacuate and live to another place. At the same time, your home is temporarily uninhabitable and being repaired due to the damages caused by a covered peril.

Medical Payments

Furthermore, personal liability and medical payment coverage is a no-fault basis, it means regardless of who is at-fault damages will be covered. Additionally, homeowners’ and renters’ insurance has a limited amount of coverage for medical bills if someone is injured inside your property or rental home.

Dwelling Coverage

Dwelling coverage will certainly cover the physical damages to the structure of the house itself. It includes the roofs, walls, floors, doors, and other structures of the dwelling. However, it only covers damages due to a covered peril that is listed in your policy. It is essential, understanding what is in your policy before signing in an agreement to make sure that you purchased insurance that can cover your needs with unexpected strikes.  Dwelling coverage is only exclusive for homeowners’ or condominium owners’.

Why is dwelling only available to Home Insurance?

Dwelling coverage covers the physical damage to the home(roofs, walls, floors, doors, and other structures.) In the event that you own a home or a condo unit, typically, you need homeowners’ insurance or condominium insurance to protect you against financial ruin. Dwelling coverage is not exclusive to renters’ insurance because it is not the responsibility of the renter to cover the damages to the home. For instance, you are renting the only thing that you need to protect is your personal property, landlord insurance will be the one to cover the damages of the home, which is purchased by landlords.

Perils covered by your Home Insurance Policy

  • Fire
  • Smoke damage
  • Windstorm
  • Lightning
  • Explosion
  • Riot
  • Theft
  • Damage by a vehicle
  • Damage by an aircraft
  • Vandalism or malicious mischief
  • Falling objects
  • Weight of ice/ snow/ sleet
  • Water leakage 

Furthermore, perils that are covered in your homeowners’ policy is usually depending on what form of homeowners’ insurance you’ll choose.

Perils covered by your Renters’ Insurance Policy

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage by a vehicle(not your own)
  • Damage by an aircraft
  • Smoke damage
  • Vandalism
  • Volcanic eruption
  • Falling objects
  • Weight of ice/snow/sleet
  • Water leakage
  • Freezing of plumbing, heating, air conditioning
  • Short circuit damage

Perils Covered by your Dwelling Coverage

  • Fire
  • Smoke damage
  • Windstorms
  • Explosion
  • Hail
  • Theft
  • Vandalism
  • Falling objects
  • Weight of snow/ sleet/ ice
  • Damages from an aircraft
  • Damages from a Vehicle

What is not covered by your home and renter’s insurance?

Homeowners’ insurance excludes Earthquake damages and Flood damages to your policy. To cover the costs of the losses due to earthquakes and floods, you have to purchase a separate policy. You can buy Earthquake insurance to private insurance providers or insurance agents that are a member of the California Earthquake Authority(CEA) as well as the flood insurance. However, flood insurance can be purchased to private insurance providers or insurance agents that are a member of the National Flood Insurance Program(NFIP).

Why is home insurance more expensive than renters’ insurance?

Generally speaking, homeowners’ insurance policy is more expensive than renters’.  Why? Because of the broad coverage of homeowners’ insurance, it can cover more property that is more vulnerable to perils. Homeowners’ insurance covers the structure of the home, and the structure or dwelling is more capable of damages from peril than a personal property that is protected inside the house. Additionally, the expenses to rebuild a home is a much higher cost than the personal property would cost to replace.

Factors that may affect homeowners’ insurance and renters’ insurance costs

The costs of both insurance policies can be determined by the coverage you choose and the amount of deductible you have. If you have pets, that could be one factor that will raise your insurance rates, surely, including the crime rate and natural disaster zones.

Additional factors that may cause higher rates for homeowners’ insurance

  1. Fire hydrant or the location of the fire station
  2. Materials your home is made of
  3. Condition of your home
  4. Age of your home
  5. The claim history
  6. Claim history that is caused by the previous owners
  7. Size of your home

How to estimate your Homeowners’ insurance rates?

In estimating your homeowners’ insurance rates, it is essential to consider such as the value of:

  1. Costs of rebuilding your house at today’s dollar including the labor and materials
  2. Value of  your personal property (such as; furniture, appliances including clothing)
  3. Your entire assets that could be at risk in essence that someone sues a liability lawsuit against you

Though there are coverages available for these types of situations. In this case, the more coverage you choose more the higher premium rates you may have; however, the more coverage you get, the better protection you may have. In fact, you don’t have to worry about dealing with anything else; It is important to realize that having the right coverage will secure your needs.

How to buy Renters’ Insurance?

When you purchase a renters’ insurance, you must consider making an inventory for all personal properties you want to be covered and the value of each property. In that way, in time you can quickly determine how much coverage you need to protect your belongings.

How to buy Homeowners’ Insurance?

Purchasing home insurance is a bit confusing especially for the first time seekers; it is important to realize as a policyholder, you must understand the exclusions and coverage of your policy and each limit you choose. However, insurance agents will help you determine what coverage you need and let you know further how homeowners’ insurance works when unexpected strikes. If you are worried about the rate that you may have, to begin with getting a free quote may help you find better coverage and affordable prices.

Homeowners’ insurance goal is to help insurance seekers to find the best coverage at affordable rates! Protect your home with trusted names. Get a Free Quote to Compare Rates!

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