Renters' and homeowners' insurance are common property insurance forms that protect you from different risks. Understanding these two forms of insurance and their differences will help you buy the right policy. Below is a basic comparison of renters' and homeowners' insurance.
Both forms of coverage protect your home's contents or personal belongings. Consider a case where burglars break into your house and steal your laptop. In such cases, it doesn't matter whether you have homeowners' or renters' insurance; either of them should help you replace the laptop.
Homeowners insurance covers the building and its contents. Renters' insurance only covers the building's contents. Consider a storm that rips a corner of your rental house and ruins some of your clothes. Homeowners insurance will help your landlord rebuild the damaged house section but not replace your clothes. You need renter's insurance to compensate you for the clothes.
Both renters' and homeowner's insurance coverage include third-party liability coverage. However, the liability claims each coverage type may compensate differs depending on circumstances. Homeowners insurance covers all claims arising from injuries the home or its members might cause. Renters' insurance only covers injuries from tenant-controlled areas.
Consider a visitor who trips and falls on a building's staircase. If the building houses multiple tenants who share the staircase, an individual renter is unlikely to be liable for the injury. If the accident occurs in a single-family home, homeowners' insurance should cover it.
You do not always have a choice in buying renters' or homeowners' insurance. If you rent a home, your landlord may require renters' insurance so you don't blame them if something happens to your belongings. Many landlords include the requirement in their lease agreements.
On the other hand, your mortgage company may require homeowners' insurance during a home purchase. The mortgage company requires insurance to help repair or rebuild the home in case of damage. Otherwise, the company may lose money if the home suffers damage that you cannot fix.
Lastly, homeowners' and renters' insurance attract different rates since they cover different risks. Homeowners' insurance requires more investment than renters' insurance. The difference makes sense homeowners' insurance covers the building, but renters' insurance doesn't.
As you can see, renters' and homeowners' insurance differ considerably. Understand the coverage, limits, and conditions of whichever policy you have. That way, you can determine whether you need riders or add-ons on top of your standard policy.
Contact a local agency that offers homeowners' insurance to learn more.