Whether you own or rent your home, make sure it is insured. Don’t forget to purchase the proper insurance policy.
Insurance is a must, whether you own or rent. There are always events that come up out of nowhere in this world.
Maybe your kid hits a baseball through the window of your house. When something unexpected happens, such as your neighbour flooding their bathroom, water damage results in your apartment, your insurance will be there to protect you.
It is important to know the differences between homeowners insurance and renters insurance before getting covered.
What does homeowners insurance cover?
In essence, this is the key difference between homeowners and renters insurance: only homeowners insurance covers damage to the actual structure of the home.
From a broken window or door to the demolition of an entire building, this includes anything that breaks. Your home insurance includes other structures you own, including fences, gardens, and garages.
In some cases, you won’t be eligible for a payout for your damages. It is not uncommon for insurance companies to offer policies that include a list of “named perils” or “covered events” – the damages their policies will pay to repair. The most common dangers are weather phenomena like heavy winds and hail.
Other covered events could include smoke, fire, falling ice, and water damage, as well as vandalism and theft.
Your home’s personal property is protected by personal property insurance. Your policy kicks in once anything you own is stolen, regardless of where the item is physically located.
You can adjust the amount you want to be covered before purchasing a policy if needed. Normally, homeowners have their house covered by a percentage of their coverage.
In the event of an injury on your property or a lawsuit for damage to someone’s property or themselves, liability insurance can serve as protection. Amounts are flexible. Pet owners whose animals tend to be aggressive, for example, often end up paying more.
A person who is injured on your property will have access to medical care if they need it. Personal liability is a fault-based policy, whereas medical coverage is a no-fault policy.
Additional living expenses
Refers to the money available to you for living expenses, including hotel or rental fees if you have to vacate your home due to an insured disaster.
It is important to have separate policies for floods and earthquakes. Most homeowner’s insurance policies do not cover them. You may be able to obtain additional coverage for earthquakes and floods in areas that are prone to these occurrences.
Additionally, insurance providers won’t cover homeowner neglect: damage that could have been prevented by basic maintenance and upkeep.
The policies also do not cover government demolitions or power outages (as long as the electricity is not coming from you).
What Renters Insurance Covers
Mostly, this is what you’re paying for. Renters insurance covers your personal property, including electronics, clothing, and equipment. You’ll need to make an inventory of what you own and determine how much it would cost to replace it before you buy a policy. Your coverage limit will be approximately this amount.
Optionally, you can choose either “replacement cost” coverage or “cash value” coverage (the cash value of your belongings). Replacement cost means a bigger payout if your items are damaged or destroyed, so the policy is nominally more expensive — $20 to $50 a year more.
Since your car insurance covers them, this policy does not cover cars. Your insurance will cover stolen items from your car, even if the car wasn’t on your property at the time.
What Renters Insurance Doesn’t Cover.
Since renters do not own their buildings, their insurance coverage does not include dwelling coverage, which means they are not covered for structural damage to buildings.
The insurance company’s list of covered events or perils for renters’ personal property compensation is similar to that of homeowners’ policies.
As long as you are single or living alone, a renter’s insurance policy will only cover what you own and your liability. If you have roommates, you’ll need to get separate policies if everyone wants the coverage.
Homeowners Pay More
The average replacement cost for a homeowner is higher, and they have more space to insure.
Homeowners’ insurance costs vary by state, location, liability risk, and replacement cost of their homes.
According to the National Association of Insurance Commissioners, the average annual homeownership premium in 2016 was $1,192, or about $100 per month. Since then, the price has only gone up; homeowners might pay anywhere from $400 to $3,000 per year.
Renters typically pay less than $30 a month.
Owning or renting a house usually determines the answer. Borrowers are often will need to have homeowner’s insurance. It’s important to note that landlords may require renters’ insurance as well.
Tenants should make sure their personal property is covered in the insurance policy. Not just their landlord’s liability.