Renters insurance and homeowners insurance are two different types of insurance policies. If you rent your home, you will need an insurance policy to cover certain damages. This is where renters insurance becomes beneficial. Homeowners insurance is purchased by people who own homes. Both policies include regular payments and help to cover certain damages to the home.
Let’s explain how the two insurance policies work, as well as the differences.
What is Homeowners Insurance?
Homeowners insurance is meant for people who own the structure they live in. It covers the building and the things inside the home. A standard home insurance policy insures the structure and the holder’s belongings in events such as a fire.
Generally, homeowners insurance covers damages caused by fire, hail, wind, theft, vandalism, and lightning, but it will not cover specific natural disasters, such as floods and earthquakes.
Types of Coverage
Home insurance provides coverages such as dwelling coverage, personal property coverage, loss of use coverage, and liability coverage.
Dwelling coverage covers the structure and the built-in appliances in the home. This includes the entire structure and connected structures such as a garage. Personal property coverage includes personal items in the home such as electronics and furniture. If they are damaged as a result of a covered event, the insurer will reimburse you.
Liability coverage covers costs associated with injuries sustained by someone on your property. This includes compensation for pain and suffering, loss of income, and medical bills.
Loss of use coverage covers the cost of getting temporary accommodations and additional living costs if you have to move out of your home due to a covered event.
A renters insurance policy covers renters and their belongings against certain risks. Standard renters insurance coverage includes personal property coverage, loss of use, personal liability coverage, and medical payments. Personal property coverage covers damages to a renter’s personal belongings, such as furniture, clothing, electronics, and appliances. The belongings may be covered for their actual cash value or replacement value, depending on the policy. There are some optional rental insurance options, such as personal injury coverage and water backup.
Renters Insurance vs. Homeowners Insurance
Renters insurance is meant for tenants while homeowners insurance is for homeowners. Renters insurance does not cover the actual structure, while home insurance covers the building as well as personal property. Apart from that, renters and homeowners insurance cover similar things such as property damage, medical liability, and additional living expenses. Both insurance policies do not cover floods, war, earthquakes, and damages due to negligence.