Homeowners Insurance vs. Renter’s Insurance: What’s the Difference? (2024)

Table of Contents

Table of Contents

  • Homeowners Insurance vs. Renter’s Insurance

  • Homeowners Insurance

  • Renter’s Insurance

  • The Bottom Line

Both protect property but in different ways


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Homeowners Insurance vs. Renter’s Insurance: What’s the Difference? (1)

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Whether you rent or own your home, the property—as well as its contents—should be protected with insurance. For those who own homes, homeowners insurance can cover the home and its contents. If the home is a rental, the landlord would insure the property, while the renter would be responsible for insuring the contents of the home.

Homeowners Insurance vs. Renter’s Insurance

Both homeowners and renter’s insurance require regular payments, usually either monthly or as one lump-sum annual payment, and a policy must be in good standing in order to pay out on a claim. Both also require the payment of a deductible for claims, unless otherwise specified in the policy.

Key Takeaways

  • Homeowners insurance covers the actual building you live in (and associated structures such as garages).
  • With renter’s insurance, the landlord will be expected to have coverage on the building, while your insurance will cover your personal property.
  • When taking out a mortgage, most lenders will require you to take out homeowners insurance.
  • Renter’s insurance is taken out by tenants to cover personal property and liability owned by the tenant and not the responsibility of the landlord.

Homeowners Insurance vs. Renter’s Insurance: What’s the Difference? (4)

Homeowners Insurance

A homeowners insurance policy is taken out by the owner of the home. The amount of insurance generally covers both the cost to replace the home in the event of a total loss and the personal property in it, such as furniture, appliances, clothing, jewelry, and dishes. If a home costs $200,000 to rebuild and the items inside the home cost $150,000 to replace, a homeowner who wanted to cover everything would need to insure the property for at least $350,000.

Renter’s Insurance

Renter’s insurance is for occupants who do not own the property but want to protect their personal belongings that are in the home or on the property. It is important for renters to note that the property owner’s insurance policy does not cover them and their items in the event that they are damaged or destroyed. Renter’s insurance policies will reimburse a renter for the replacement cost of property that is lost or damaged while on the property. It can also extend to means of transportation, covering items stolen from your car or a bike stolen while you were at work.

Renters should never assume that a landlord’s insurance will cover anything they own in their rental or on their rental property.

The Bottom Line

A property owner is not obligated to insure their property unless there are special circ*mstances. One such circ*mstance is a homeowner who has a mortgage. Usually, these owners are required to take out an insurance policy that protects the home that is mortgaged. Lenders are protected through the mortgagee clause in these policies.

Landlords often stipulate that tenants obtain renter’s insurance in the lease agreement. As you are insuring a more substantial asset with homeowners insurance, the cost will likely be higher than for rental insurance. Most homeowners' and renters' insurance policies also have liability coverage associated with them.

Homeowners Insurance vs. Renter’s Insurance: What’s the Difference? (2024)


Homeowners Insurance vs. Renter’s Insurance: What’s the Difference? ›

The main and most obvious distinction between renters insurance and homeowners insurance is that a homeowners policy safeguards the home's physical structure against covered perils while renters insurance won't protect the home or building occupied by the tenant.

Is renters insurance the same as home insurance? ›

Homeowners insurance covers the actual building you live in (and associated structures such as garages). With renter's insurance, the landlord will be expected to have coverage on the building, while your insurance will cover your personal property.

What is the main reason someone would want to have renters insurance? ›

Renters insurance can help you repair or replace property after loss due to many types of damage or theft. It can also provide coverage for an accident at your residence. Policies usually have very affordable annual premiums.

What is the primary difference between homeowners insurance and renters insurance Quizlet? ›

What is the difference between homeowner's insurance and renter's insurance? Homeowner's insurance covers the residence. Renter's insurance only covers the belongings in a residence.

What is the difference between property insurance and homeowners insurance? ›

Key Takeaways

Property insurance refers to a series of policies that offer either property protection or liability coverage. Property insurance can include homeowners insurance, renters insurance, flood insurance, and earthquake insurance, among other policies.

Why is homeowners insurance more expensive than renters insurance? ›

Homeowners insurance is more expensive than renters insurance because it includes coverage for both the structure of the house, as well as the contents inside.

Is renters insurance a real thing? ›

Renters insurance protects your personal property in a rented apartment, condo or home from unexpected circ*mstances such as theft, a fire or sewer backup damage – and will pay you for lost or damaged possessions.

What does renters insurance actually cover? ›

Renters insurance covers personal property, personal liability, medical payments and additional living expenses or loss of use, up to the limits of your policy.

Why do people choose not to have renters insurance? ›

Some Renters Feel Their Property is Insured by the Landlord

Your landlord may have property insurance to protect the building structure and common areas, but this insurance offers no protection for your furniture and other belongings inside your rented property.

How would you calculate how much coverage you need? ›

One of the simplest ways to get a rough idea of how much life insurance to buy is to multiply your gross (a.k.a. before tax) income by 10 to 15. Another popular formula recommends adding $100,000 to that amount for each child's college education expenses.

What are two examples when renters insurance would not cover the event? ›

Flooding, earthquakes and sinkholes are all examples of natural disasters that are not covered by a typical renters insurance policy. All three of these events can easily damage your personal property, so you should buy additional coverage if you think you're at risk.

Which of the following is not covered by homeowners insurance? ›

Many things that aren't covered under your standard policy typically result from neglect and a failure to properly maintain the property. Termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear are not covered.

What are the two types of homeowners insurance? ›

What are the different types of homeowners insurance?
  • Dwelling coverage is the basis for all homeowners insurance policies. ...
  • Contents coverage protects items including furniture and clothing in your home.

What is the best homeowners insurance? ›

The best home insurance companies in April 2024
Insurance CompanyBest forBankrate Score
USAABest overall4.7 Rating: 4.7 stars out of 5
AllstateBest overall4.2 Rating: 4.2 stars out of 5
LemonadeBest for digital experience3.8 Rating: 3.8 stars out of 5
ChubbBest for high-value home coverage4.3 Rating: 4.3 stars out of 5
6 more rows

What are the three main types of homeowners insurance? ›

Homeowners insurance policies generally cover destruction and damage to a residence's interior and exterior, the loss or theft of possessions, and personal liability for harm to others. Three basic levels of coverage exist: actual cash value, replacement cost, and extended replacement cost/value.

Does homeowners insurance go down when a mortgage is paid off? ›

Unfortunately, paying off your mortgage doesn't reduce homeowners insurance premiums. You will no longer be required to carry home insurance as it isn't legally mandated, but your home will still require the same level of coverage to protect you from financial losses.

Which coverage is included in homeowners insurance but not in renters insurance Quizlet? ›

unlike homeowner's insurance, renter's insurance will not cover items lost in a burglary.

Is home insurance mandatory in California? ›

Is homeowners insurance required by law in California? Homeowners insurance is not required in the state of California, but if you're financing your home through a mortgage lender, they'll probably require it as part of your loan terms.

Which of the following best defines homeowner's insurance? ›

Homeowners insurance is a type of property insurance that covers losses and damages to your home. It also protects assets in the house. The policy usually covers interior damage, exterior damage, loss or damage of personal assets, and injury that arises while on the property.

Why should renters and homeowners prepare a home inventory? ›

Creating and updating an inventory of your personal possessions is one of the best ways to make the most of your homeowners or renters insurance, and makes filing a claim easier and more efficient. A home inventory is simply a list of your personal possessions along with their estimated financial value.

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