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Differences between renters insurance and homeowners insurance

By Gary Bangstad on April 7th, 2010

Homeowners Insurance Renters Insurance

You may be surprised to find that there are many similarities between home insurance and renters insurance. Both types of coverage provide insurance protection for your personal possessions, liability, and additional living expenses when damage prevents you from living at home.

Personal Possessions

Homeowners and renters insurance cover the possessions in your home or apartment against damage due to fire, smoke, lightning, theft, vandalism, explosion, windstorm, water, and other disasters listed in your policy. In fact, renters insurance and homeowners insurance are almost identical in this type of coverage, but only home insurance provides coverage for the structure.

Liability

Another similarity between the two types of policies is that they both provide liability coverage, which is an important feature. The liability portion of your renters and home insurance covers you or your family members against lawsuits for bodily injury or property damage caused to others. The coverage even pays for no-fault medical coverage if a friend or neighbor is injured in your home.

Additional Living Expenses

Additionally, home insurance and renters insurance provide coverage for expenses you incur should your home or apartment become uninhabitable due to a covered hazard. Coverage includes hotel bills, restaurant meals, and other expenses that would be above and beyond your normal living expenses.

Your Landlord Has Home Insurance: Does It Cover You?

This is a common misconception and could potentially cost you a lot of money. Your landlord's home insurance policy does not cover you or your belongings--it just covers the building you live in. Furthermore, your landlord's policy does not provide liability protection for damage you may inadvertently cause to the building, such as a kitchen fire or plumbing mishap.

Discounts

Home insurance and renters insurance are also similar in that both policy types offer discounts for higher deductibles, multiple policies, fire or burglar alarms, sprinkler systems, and deadbolts on exterior doors.

Be Aware of Your Need for Home Insurance or Renters Insurance

Most mortgage lenders require home owners to maintain home insurance. But even when your home is paid off, you should carry homeowners insurance to protect your investment in case of disaster. Although renters insurance is usually not a requirement, most renters should carry this type of insurance. Both homeowners and renters are wise to invest in coverage to protect their financial futures.

Shopping for Home and Renters Insurance

Many home insurance companies also sell renters insurance, so coverage should be easy to find. When shopping for any type of insurance policy, don't shop based on price alone--make sure that the policy has the coverage you need and that the insurance company you are considering has a good history of paying claims. Ask your friends, relatives, and neighbors for their recommendations. Compare home and renters insurance quotes from multiple insurance companies and choose the best policy for your needs.

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