Differences between renters insurance and homeowners insurance

Renters insurance is often thought of as the equivalent to homeowners insurance for individuals who rent instead of owning a home, but this isn’t necessarily the case. While there are some similarities between the two types of insurance there are also some rather specific differences between them as well. If you’ve ever wondered about how these two types of insurance coverage compare to each other, here are some of the main differences so that you can see for yourself.

Obviously, the biggest difference between homeowners insurance and renters insurance is the exact type of coverage that they provide. While homeowners insurance provides coverage for the home and property itself as well as most everything in it, renters insurance is focused exclusively on the personal property of the renter. This makes sense, of course, as someone renting a house or apartment would have no reason to provide coverage on the landlord’s property.

Another major difference between the two types of insurance is the fact that homeowners insurance is often required in order to get a mortgage loan while most landlords will not require a tenant to take out renters insurance. The reason for this should be clear enough, as a lender will want to protect their investment while a landlord has no reason to care whether their tenants’ belongings are insured. Even in situations where a renter is required by their rental agreement to purchase renters insurance, the requirements are still significantly different as the homeowners insurance requirement is generally for financial reasons where renters insurance requirements are almost always for liability reasons.

The premiums that have to be paid for renters insurance and homeowners insurance are obviously different, though that difference isn’t necessarily relative to the amount of coverage that the different policies provide. Though homeowners insurance obviously costs more than renters insurance does, the amount of coverage provided is generally much higher and more all-inclusive. Renters insurance tends to have slightly more limitations and restrictions on basic policies, and in some cases may even cost at least a little more when compared to the amount of coverage that is provided.

One final differences between renters insurance and homeowners insurance is transferability from one residence to another. Since homeowners insurance is designed to provide coverage based upon the total value of the house and property in question, you won’t be able to simply transfer that coverage to another house and keep paying the same premium as you were with the old one. A new policy will have to be taken out which is based upon the value of the new property. With renters insurance the value is based upon your personal property instead, the value of which should remain constant regardless of which house or apartment you’re living in. Because of this it should be a relatively straightforward procedure to keep your policy when you move; in many cases you may not be required to change your policy at all, and even if you are then the premium that you pay for your coverage should remain exactly the same.