Homeowners and renters have very different responsibilities when it comes to any residential property. Because of this, the coverage between homeowner’s insurance and renter’s insurance are entire worlds apart. Still, many people have misconceptions about what these differences are and what each type of policy covers. Below, we’ll break down the critical differences between a homeowner’s insurance policy and the coverage provided by renter’s insurance.
This type of insurance is only taken out by the individual who owns the property, not the renter. Even if the owner of the property is not living in the residence, it is their obligation to have insurance on the home.
Homeowner’s insurance covers the building itself and any attached buildings on the land, like a garage. Additional coverage can be taken out to take care of the financial loss of items inside of the building, as well, but this is optional. Generally, a homeowner will only have possessions covered by the insurance policy if they are living within the dwelling.
If a renter is residing on the property, coverage for their possessions in the event of a catastrophic loss would be handled under renter’s insurance.
An insurance policy like this will cover the costs to rebuild a home, so the policy should be taken out to the tune of the home’s overall value. If the home is worth $250,000, then the insurance coverage should meet or exceed that amount.
Homeowners are not on the hook for renter’s insurance. In fact, it isn’t even a requirement most of the time. Some homeowners, when they rent out their properties, can choose to require tenants take out renter’s insurance, however.
Renters can choose to take out a renter’s insurance policy to protect their personal belongings in the event of an incident – like a fire or robbery – that causes their items to become damaged or lost. In no way does renter’s insurance cover the building itself.
As a stipulation in the renter’s agreement, a property owner may require renters to take out an insurance policy to cover their belongings. This isn’t a terrible thing, though. The cost of renter’s insurance is substantially less than homeowner’s insurance – sometimes even a negligible cost – and covers quite a bit more than the renter is actually paying.
It is important to be able to distinguish between these two forms of insurance, whether you’re a renter or a homeowner.