What's the Difference Between Homeowners and Renters Insurance? (2024)

Let’s say you’ve rented your place for a few years, and now you’re looking to buy your own home. You’re familiar with renters insurance, but eventually you’ll need a different type of policy to cover you. What should you expect?

Let’s take a quick look at the differences between renters insurance and homeowners insurance.

  • Homeowners insurance vs. renters insurance
  • What renters insurance covers
  • What homeowners insurance covers
  • Cost comparison
  • How much coverage you’ll need

Homeowners insurance vs. renters insurance

Hold onto your seats, because this might come as a shock: Renters insurance (referred to in the industry as an HO4 policy) is for renters, and homeowners (HO3) and condo insurance (HO6) are for policyholders who own their homes.

Not surprisingly, you’ll pay a bit more to insure a place you own than you’d pay to insure a comparable rental property. (We’ll cover costs in more detail below.)

Quick reminder: Lemonade offers HO3 and HO6 policies for homeowners, and provides HO4 coverage to renters.

What does renters insurance cover?

Renters insurance coverage includes everything that homeowners HO3 insurance covers, except for damage to the rental property itself—because you don’t own it. Property damage coverage is part of your landlord’s insurance policy instead.

Renters insurance covers things like:

  • Loss or damage due to certain causes (called perils) like fire,, theft, or vandalism
  • Temporary living expenses if the covered loss is so bad your home’s not livable
  • Personal liability & medical bills for instances in which someone gets hurt at your place in an accident—whether that means hospital bills or legal fees from a lawsuit. It also extends to certain damages that you may cause when you’re away from your home.

It’s very important to note that your renters insurance policy covers your belongings against theft anywhere in the world—whether you’re at home, on the subway, or visiting your favorite restaurant.

You should also read your insurance quote carefully to look for exclusions. These are things that are not covered by your policy. For example, renters insurance usually doesn’t cover pests like mice or (eek!) bed bugs.

It won’t include damage to the personal property of other people who live in your rented home (unless they are a blood relative, spouse, or adopted child) so your roommates each need their own renters insurance policy.

What does homeowners insurance cover?

A typical HO3 policy covers a lot, like damage to your home and your personal property, personal liability, living expenses, and medical fees.

But you’ll still need to check your policy for exclusions. Some common things that you wouldn’t be covered for include:

See Also

  • Flooding and some other types of water damage
  • Anything that you could have fixed before it reached the point of causing damage (like creeping mold)
  • Certain natural disasters, like earthquakes
  • Termite infestations
  • People who live in your home but aren’t related to you by blood, marriage, or adoption (but note that you can get additional insurance for them)

You can buy individual insurance policies to cover any gaps in your insurance, like flood insurance or earthquake insurance.

If you have expensive items, like high-end jewelry, expensive cameras, or specialty equipment, you’ll probably need additional coverage for them because a standard homeowners policy won’t cover the replacement cost. The industry refers to this as “scheduled personal property coverage,” but at Lemonade we simply call it “extra coverage.”

Coverage TypeHomeowners InsuranceRenters Insurance
Dwelling YesNo
Personal property YesYes
Loss of useYesYes
Personal liabilityYesYes
Medical payments to othersYesYes

Costs of homeowners insurance vs. renters insurance

In general, you can expect your renters insurance quote to be less than for homeowners insurance. That’s because homeowners insurance includes the building structure itself, which isn’t the case for renters insurance policies.

In both cases, the cost of your insurance policy depends on a few factors, including:

  • Where you live. For the same size home, homeowners insurance costs as little as $781 in Delaware but as much as $3,383 in Colorado.
  • How much deductible you’re willing to pay—the higher the deductible, the lower the insurance premiums.
  • For homeowners insurance, the condition of your home, its size, and its age can all affect premium price. (For renters insurance, this doesn’t make a difference.)
  • Your claims history. If a policyholder has made a lot of insurance claims in the last 5–10 years, they’ll likely have to pay a higher premium.
  • The cash value of your personal items. The higher their value, the more you’ll have to pay to insure them.
  • Your home security set-up, like whether you have burglar alarms, motion-triggered lighting, window locks, and so on.

All these factors make it tough to tell you how much you might have to pay. But we can tell you that on average, renters insurance in the US generally costs between $15 to $30 per month, or $180 to $360 per year, according to the National Association of Insurance Commissioners. Meanwhile, the average annual cost of homeowners insurance is $1,680 per year, or $140 a month.

How much renters or homeowners insurance coverage do I need?

What's the Difference Between Homeowners and Renters Insurance? (2)

“How much coverage do I need?” is a tricky question, and one whose answer depends on your personal situation, as well as your tolerance for risk.

As a baseline, homeowners insurance needs to cover the amount it would cost to totally rebuild your home. For renters insurance, it’s entirely up to you (but the coverage you choose should be aligned with the value of the stuff you own).

Here are some things to consider:

  • How much would it cost to replace your household appliances, furniture, and clothing? You need enough insurance to cover the basics if you lost everything.
  • Which are your most beloved possessions, and how much would it cost to replace them?
  • How much money might you need, beyond your normal daily expenses, if you can’t live at home for a week or two?
  • How much might it cost if your kitchen is out of commission for a couple of weeks and you have to rely on takeout meals?
  • What personal liability coverage might you need? If you have a pool or a pond on your property, or you have a dog and your neighbors have small children, you might prefer a higher coverage than if all your neighbors are adults and you don’t have any hazards in your garden.

When it comes to deciding how much insurance to pay for, the main thing to think about is how much your peace of mind is worth. It’s often worth paying a little more to know that you have enough insurance to cope with (almost) anything that comes your way.

Lemonade and your home insurance needs

There’s a lot to think about before getting insurance, but it’s worth it to rest easy without worrying about the “what ifs”.

Whether you’re renting or you own your own place—and whether you want total coverage for every eventuality, or you’d prefer to go basic and keep the costs as low as possible—Lemonade makes it easy to buy and manage home insurance.

You can use the Lemonade app or website to get a quote, upgrade your coverage, file a claim, and review your homeowners or renters insurance policy.

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What's the Difference Between Homeowners and Renters Insurance? (2024)


What's the Difference Between Homeowners and Renters 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 difference between homeowners and renters insurance? ›

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.

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

Homeowner's insurance covers the residence. Renter's insurance only covers the belongings in a residence.

What the difference between homeowners insurance and landlord insurance? ›

Landlord insurance is designed for a property you're renting out for an extended period, while homeowners insurance protects your primary residence. Jennifer Gimbel. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

Why is homeowner renters insurance important? ›

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. Note that your landlord's property insurance doesn't cover your belongings.

Which statement about homeowners insurance is true? ›

The statement about homeowners insurance that is true is:

Premiums are the monthly payments made to the insurance company, while deductibles are the amount the policyholder must pay out of pocket before the insurance company covers any 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.

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 is renters insurance also known as? ›

What is Renter's Insurance? Renters insurance, also known as tenants insurance, is a type of policy offered by most major New York insurers. These policies provide contents coverage and liability protection in the event someone becomes injured at your residence.

What type of insurance is likely to be included in a homeowners policy? ›

Standard homeowners insurance typically offers a range of protections for your property and personal belongings. An HO-3 is the standard homeowners insurance policy that covers damage to your home's structure, personal belongings, and provides liability, medical payments, and additional living expense coverage.

What is a DP3 homeowners insurance policy? ›

A DP3 policy is dwelling property insurance that's customized to fit homes with older roofs or homes used as investment properties.

What is the amount of damages a policyholder must pay before the insurance company pays the claim? ›

Deductible - The amount of the loss that the policyholder is responsible to pay up-front before covered benefits from the insurance company are payable. This is applicable to comprehensive or collision coverage only.

How much is landlord insurance in Florida? ›

The average cost of landlord insurance in Florida is $2,860 per year. American Modern, Security First, and Kin all offer landlord insurance in Florida.

Is renter insurance worth it? ›

Renters insurance coverage is almost always worth it. It is much more affordable than other policies, including home or auto insurance, and provides valuable financial protection. Even if you can save enough money to cover unexpected loss, renters insurance may be worthwhile.

Is homeowners insurance tax deductible? ›

Unfortunately, homeowners insurance premiums aren't tax deductible, unless the property creates a source of income.

What options are there when choosing this renters insurance? ›

There are two ways in which renters insurance reimburses—actual cash value, which pays what the property was worth at the time of damage, and replacement cost, which pays the full cost of replacing the items with new ones.

What type of insurance would you consider the most important and why? ›

Life insurance will help provide financially for your survivors. Health insurance protects you from catastrophic bills in case of a serious accident or illness. Long-term disability protects you from an unexpected loss of income. Auto insurance prevents you from bearing the financial burden of an expensive accident.

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.

What are examples of commonly covered and not covered homeowners insurance situations? ›

Typical homeowners insurance policies offer coverage for damage caused by fires, lightning strikes, windstorms and hail. But, it's important to know that not all natural disasters are covered by homeowners insurance. For example, damage caused by earthquakes and floods are not typically covered by homeowners insurance.

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