Homeowners Insurance vs. Renters Insurance
Your living space is your refuge and place of comfort. Protecting your home and all of your belongings brings peace of mind and protection in the event of an emergency or disaster. You don’t want to be left with nothing and no way to recover if anything were to happen.
Obviously, whether you own a home or whether you rent will dictate which type of insurance you need. However, the size of your home or whether you live in a condo can affect the type of “home insurance” you need, and there are several things that a homeowner’s policy would cover that a renter’s policy wouldn’t. Read on to learn about the key differences between homeowners and renters insurance so you can make the best decision for you and your family.
Renters insurance usually does not cover structural damages because the landlord’s insurance will cover any damages to the structure. For example, damages from a fire caused by electrical issues would be covered, but if you are at fault for causing the fire, the burden of liability will be on you. This is where renters insurance comes in.
Homeowners insurance, on the other hand, will have coverage for certain types of structural damage (usually including fire damage, but often excluding flood damage) as outlined in your policy. It’s vital to take a close look at any policy so you know exactly what is covered, and what isn’t.
Renters insurance is much less expensive than homeowners, because your landlord’s policy takes care of most of the “big ticket” items like structural damage. However, you still need liability coverage and also protection for all your belongings.
Another reason why renters insurance is so cheap is because the size of the property is smaller and subsequently the amount of personal belongings is typically fewer in an apartment or townhome vs. a full-sized home. Since homeowners insurance considers the cost and quality of a home for rebuilding purposes, it is more expensive (and almost always mandatory, especially when you have a mortgage).
Personal Property Coverage
This is the main purpose of renters insurance, because although your landlord’s insurance will cover structural damages, it won’t cover any damages or loss to your personal property.
There are generally two types of personal property coverage when it comes to renters insurance:
- Replacement coverage, which will pay out the cost of replacing your belongings, no matter their value.
- Actual cash value coverage, which will only pay out what the lost items were worth. The value of those items has likely depreciated over time, so your payout will be less. This coverage is usually the less expensive of the two options.
If you live in or own a condo, your insurance coverage is likely different than both homeowners and rental insurance. This is because although you own your condo, it is part of a larger structure that is usually insured by a Home Owner’s Association (HOA). To determine what coverage you will need, check with your HOA and get a copy of your lease to take to an insurance agent to make sure all of your bases are covered.
If you are unsure which type of insurance you need for your home or apartment, find an agent near you or call 303-451-8100 to speak with an independent agent today!