What is the Difference Between Homeowners Insurance and Renters Insurance?

One of the most obvious differences between homeowners insurance and renters insurance is the price, but there are a lot of other details to consider as well. In most cases, someone owning a home has a lot more at stake because they own the structure that is being lived in. Renters lease out space from building owners, so they have less to be concerned about. Not all landlords require their tenants to purchase renters insurance, but some do, as purchasing renters insurance is often in both the renters and property owner’s best interests.

What is Homeowners Insurance?

When someone owns a home, they have complete ownership of the structure, its contents, and any included property. Their responsibilities are twofold: they need to have dwelling coverage in addition to personal liability coverage. These policies generally provide for structural damage repairs, additional living expenses if you cannot live in the house, electrical outages, equipment breakdowns, and service line problems. There can also be options for cyber liability, home offices, and water damage. You can sometimes purchase additional coverage for floods, earthquakes, and jewelry.

These policies can allow doe benefits when a tree falls onto an insured home’s roof or there is a fire, as two examples. Other situations might include coverage for losses from a burglary or vandalism. As for the liability coverage, this could come into play if a neighbor’s child got hurt in your swimming pool or your mail carrier slips, falls, and gets injured on your sidewalk. Homeowners insurance is not just for single-family homes, either; if you own a mobile home, townhome, ranch, apartment, or other dwelling, you can still get one of these policies for the most part.

What is Renters Insurance?

Those who rent properties and spaces from owners do not own the structures, so there is no reason to purchase a homeowners policy. The property owner is responsible for purchasing those, but the coverage only extends to the structure, and not what is inside. Renters insurance is used to reimburse tenants for the replacement cost of their personal property that might be damaged, lost, or stolen during their leases.

Some renters insurance policies have the option of adding coverage for items that might be stolen from the renters vehicles. As with homeowners policies, coverage goes up to a certain limit. Renters policies should also include personal liability coverage compensation to pay for any medical bills (and sometimes legal bills) if someone is injured in the rental residence, plus living expenses if the rental property is uninhabitable for a certain amount of time.

Do These Policies Have Exclusions?

All insurance policies can have exclusions, and while some are standard others may be optional – it all depends on the policy you choose, and you will pay more to get fewer exclusions. With homeowner policies, common ones include damaged incurred from lightning, floods, earthquakes, hail, damage caused by animals, pollution, and normal wear and tear. Renter policies also usually exclude natural disasters like hurricanes and earthquakes. Again, additional policies can be purchased to cover these as well as smaller valuables like jewelry.

Comparing Homeowner and Renter Insurance

Homeowners are required to purchase insurance when they first buy their properties, and it is wise to take the time to shop around to compare the various options. Once you pick an insurer, you do not have to stick with it forever; look around again every six to 12 months to see if you can get a better deal. According to Policygenius, these policies average about $1,899 a year and the premiums are paid by the month, quarterly, or annually.

Renters are not always required to buy insurance policies, but landlords often require them. They cost less than a tenth as much as homeowners policies, with an average of $180 a year. The premiums are paid in the same ways. Most homeowners and renters insurance policies have deductibles that must be paid when claims are made. Making claims can also increase premium amounts, so people often pay for less costly damages out-of-pocket. Policy providers are known to offer discounts too, so take advantage of those when you see good ones.

Do I Need Extra Insurance to Rent Out My Property?

Since homeowner insurance policies usually do not cover damage that happens when spaces and properties are being rented to others, getting additional insurance before renting out your property is wise. First, contact your insurance company to see if the property qualifies as a rental. They will ask if it has a separate entrance, if the renter is a family member, and so forth. Every provider has different parameters.

If you plan on renting out the property for a long period of time, you will also need to get landlord insurance, which should include property damage, loss of income coverage, and liability insurance. Make sure that your personal belongings are covered, and feel free to require your tenants to purchase their own renters insurance.

What if My Insurance Provider Will Not Cover My Losses?

Insurance policies can be long and difficult to decipher, so it is important to go over yours with a fine-toothed comb before signing and paying. Yet even if you think you understand all of the exclusions, some of the fine print may have slipped by when you were going over it. In other cases, providers delay or deny claims for other reasons that seem to go against what the policies show. It is also not unheard of for companies to drop customers for seemingly unjust reasons.

Sometimes denials are legitimate, and other times they are not. You have the right to file an appeal, and this involves gathering important information like dates, extent of the damages, witness statements, receipts, and other evidence. Independent appraisers can be brought in when a value of a loss is disputed. If negligence is cited as the reason for a claim denial, you may need to gather even more proof. If the insurance company will not change their decision, you might want to reach out to an experienced insurance lawyer.

The Plainfield Insurance Lawyers at Herold Law, P.A. Help Homeowners and Renters with Insurance Claim Issues

Struggling to get an insurance provider to pay out what you are owed in damages is no easy task, but the knowledgeable Plainfield insurance lawyers at Herold Law, P.A. represent their clients’ interests with skill and determination. For a confidential consultation, call us at 908-647-1022 or complete our online form. We are located in Warren, New Jersey, and help clients in Warren and Plainfield.

• Category: Insurance Law