An increasing number of Americans are renting homes instead of buying, due to increases in real estate prices across the country. Whether you own your own home or you decide to rent, you need to be protected against the worst. Homeowner insurance and renter insurance are not interchangeable. They both offer similar types of protection, but they are aimed at different groups. There is a lot of confusion, which is why only about one third of all renters are actually covered under a comprehensive insurance package. Homeowners and renters need to familiarize themselves with both types of insurance policies to know if they need homeowner vs renter insurance.
What Does Renter And Homeowner Insurance Do?
Renter insurance offers three different types of coverage. It offers personal property coverage and personal liability coverage, and it will provide additional living expenses if the rented property in question is rendered temporarily uninhabitable. Homeowner insurance, on the other hand, offers four types of protection. These are personal property coverage, additional living expenses, coverage for the property’s structure and personal liability coverage.
What Both Renter And Homeowner Insurance Cover
Both types of insurance have numerous similarities. Personal property coverage is provided as part of both policies. The named perils within these policies are often the same for renters and homeowners. Common named perils include damage caused by major weather events, riots, smoke damage, short circuit damage due to electrical appliances and falling objects. Homeowner and renter insurance also offer full coverage for items that are stolen. Personal liability coverage also figures within both policies. This protects the policyholder in the event someone sues for damage to their property or an unintentional injury.
Both policies will offer coverage for medical bills, if necessary. Medical bill coverage is classified as distinct from personal liability coverage. Additional living coverage is another similarity between the two types of policies. Also known as loss-of-use coverage, if a property has to be vacated due to a named peril, the insurer will cover accommodation and food costs, plus other expenses. Neither policy covers injuries caused by a motor vehicle, as this is already covered by auto insurance. Furthermore, flood and earthquake damage are specifically excluded from both these policies.
What Differs Between Homeowner Vs Renter Insurance?
Homeowner insurance and renter insurance are extremely similar forms of insurance. Both types of policies will offer similar levels of protection. However, there are differences people need to take into account. One of the main reasons why renter insurance across the country is less common is because many renters believe they are sufficiently covered under their landlord’s insurance policy. This is not the case.
Dwelling Coverage Is Excluded In Renter Insurance
The main difference between homeowner insurance and renter insurance is that the former is aimed at homeowners and protects the building, whereas renter insurance is designed to cover a tenant’s belongings. Homeowners are covered against the damage and/or destruction of their property’s structure and outbuildings. Renter insurance specifically excludes dwelling coverage because it is not the responsibility of the tenant if the structure is damaged or destroyed. It is the responsibility of the landlord.
Coverage Of Other Home Structures Is Included In Homeowners’ Insurance
Homeowners’ insurance covers more than just the main structure. Outbuildings are also covered, such as detached garages and separate buildings used for home offices. The only caveat is these outbuildings must be specifically named when taking out the policy. If an additional structure is built and the insurer has not been made aware of it, they will not provide coverage for these unregistered structures.
Homeowner Insurance Is More Expensive Than Renter Insurance
Homeowner insurance will always be more expensive than renter insurance. Landlords should expect to pay higher premiums than their tenants. The reason for this is simple. Real estate owners must have a higher level of coverage because the risk to the insurer is heightened. In the event of a natural disaster, an insurer may need to pay out a six-figure sum to the policyholder. A tenant, on the other hand, may lose their personal belongings and may be required to move out, but the insurer will not have to cover any major repair or reconstruction costs.
Homeowner Insurance Only Covers The Landlord’s Property
Renters are often confused about whether they are covered or not, as homeowner insurance and landlord insurance both have coverage for personal property. Homeowner insurance will cover personal property in the home, but only the landlord’s property, and only if that property is necessary for the maintenance of the home. For example, homeowner insurance will provide protection for items like a lawnmower or a snowblower, but the tenant’s property has no such protection under this policy.
Talk To Merchant Family About Homeowner Vs Renter Insurance
If you rent anywhere in the U.S., you need renter insurance or you are not covered if your belongings are damaged or destroyed. Your landlord’s policy offers no such protection to you. Without renter insurance, your personal property is vulnerable. You are also vulnerable legally if someone is injured in your rented property and you are found to be liable.Talk to the renter insurance pros at Merchant Family Agency to find out more about ensuring you and your belongings are fully protected.