Homeowners insurance vs. renters insurance


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Written by
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UPDATED: 2020-05-15T19:11:08.229Z
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The front door of a brick house in an urban New York neighborhood.

Whether you are a renter looking to buy your first home or a homeowner who is considering downsizing to an apartment, you know you want insurance to protect your personal property. However, you might not be familiar with all of the ways in which homeowners insurance is different from renters insurance.

In this post we dive into the many ways in which homeowners insurance is different from renters insurance, as well as some similarities.

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Difference #1: The exterior of the building

The biggest and most evident difference between homeowners insurance and renters insurance is that while homeowners insurance covers the exterior of your physical dwelling, renters insurance does not. If a tornado strikes your home, your homeowners insurance will cover repairs to the house itself, such as siding being ripped off. If a tornado causes siding to come off of your apartment building, it’s the landlord’s insurance that will cover repairing the siding.

This is because the landlord is the one who owns the building in which your apartment is located. If there’s no damage to your personal property, just the exterior of the building, your renters insurance doesn’t kick in.

Difference #2: The physical structure of the building

This is very similar to what is mentioned in the item above, concerning the exterior of the building. For renters, however, there can be some extenuating circumstances, which we’ll go into below.

If there’s damage to the physical structure of a house and the damage was done by a covered peril, such as a fire, homeowners insurance should cover it. If there’s a fire and an apartment building is damaged, it’s the landlord’s insurance, not the renter’s, that will cover the damage… usually.

There are some circumstances where a renter could be held liable for a fire and where the renter’s liability insurance coverage might come into play. If there’s a fire in the kitchen and the renter is clearly at fault, the landlord’s insurance company might try to recoup some of what they end up paying out for the damage.

For the most part, it’s reasonable and accurate to state that homeowners insurance will cover damage to the physical structure of a home, and a landlord’s insurance — rather than a renter’s — will cover damage done to an apartment building.

This coverage is called dwelling coverage and it’s available to homeowners but not to renters.

So, this leads to an obvious question: what is landlord insurance and what does it cover? Landlord’s insurance is protection for the owner of a rental property and includes property and liability coverage. A landlord will be held responsible for property issues that lead to problems, so this is very important coverage for a landlord to have.

While most professionally managed rental properties will be covered by landlord’s insurance, if you are renting from an individual it’s worth asking if they have landlord’s insurance. If a fire breaks out in your apartment and it’s because of a maintenance issue, such as exposed wiring, it’s the landlord who is at fault.

Difference #3: Personal Property limits

Both renters insurance and homeowners insurance provide personal property coverage. This means that if your property is damaged or stolen, both homeowners insurance and renters insurance provide coverage.

The difference between them is potentially the amount of coverage that comes with a standard policy. Some homeowners policies will have a default personal property coverage limit that equals 50 percent of the dwelling coverage. Since renters insurance doesn’t include dwelling coverage that marks another difference between homeowners and renters insurance.

Single-family homes are generally larger (and hold more stuff) than an apartment. Of course, there are exceptions; some apartments can have just as much square footage as a house.

This is why it’s so important to conduct a home inventory, whether you are living in a house or are renting. Typically, when you are applying for insurance, you’ll be asked how much square footage there is or you will be asked to choose how much personal property coverage you believe you’ll need.

There may also be different coverage limits for valuable personal property between renters insurance and homeowners insurance.

Similarities between homeowners insurance and renters insurance

Despite the three big differences between homeowners insurance and renters insurance that are listed above, there are many similarities between the two, at least as far as what they don’t cover.

  • Neither homeowners insurance nor renters insurance typically cover losses associated with flooding.
  • Neither one typically covers damage to property or belongings caused by earthquakes or other earth-movement events, such as sinkholes.
  • Neither one typically covers damage done by pests, such as termites or rodents. (However, many states require landlords to ensure that the properties they rent are livable and free from hazards; pest infestations might be considered a hazard that makes a rental unit unlivable.)

The good news is that whether you are a homeowner or a renter, there are insurance riders available for you to purchase additional coverage for your valuable personal property, or for earthquake coverage if you feel you need it. Flood insurance is available through the National Flood Insurance Program (NFIP).

Insuring your property is important and there are many options out there. You can find the best and cheapest insurance company option for you by shopping around. Visit Clearsurance’s home insurance or renters insurance rankings page to find the best home or renters insurance companies in your zip code according to customer reviews.

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