Protecting Your Business Investment with AirBNB Insurance ProtectionNovember 14, 2019
New Years Resolutions for Your Insurance PolicyJanuary 16, 2020
Renter’s Insurance vs. House Insurance: What’s the Difference?
No matter your current living situation—whether you own a house or rent an apartment—it is vital to shield yourself from any risks with the property insurance coverage. If you are a tenant and are renting a property that belongs to someone else, renter’s insurance is likely the best type of coverage for your situation.
If you own a house, then it is essential to have house insurance. What is the difference between these two types of property insurance, you may ask? In this article, we will explore the renter’s insurance vs. house insurance discussion by comparing and contrasting a standard renter’s insurance policy with a standard homeowner’s insurance policy.
What Are These Types of Coverages?
Let’s start with some basic definition. House insurance is designed to protect both your home and its contents from most risks. If your house were to burn to the ground or be ransacked by a burglar, your insurance policy would cover those damages.
A house insurance policy, depending on how it is written, may include the replacement cost of lost or damaged belongings. This policy usually underwrites repairs or replacements for property damaged in the incident, additional living expenses (such as hotel rooms or other temporary living arrangements during the repair of your home), and more.
Renter’s insurance (often referred to as ‘tenant insurance’) is slightly different. While this type of insurance is sometimes thought of as ‘home insurance for tenants,’ it is fundamentally different in one significant way.
House insurance coverage protects both the building, including attached structures such as garages or granny flats and the contents. A renter’s insurance policy only includes personal property coverage or coverage for the tenant’s belongings. It does not include any coverage of the building itself, as the tenant does not own the building and is renting it from someone else.
Are These Types of Coverages Required?
While there are differences to consider while discussing renter’s insurance vs. house insurance, there are also commonalities. One of those similarities is that you likely won’t be permitted to rent or own residential property without having one of these policies. Landlords will typically require all tenants to buy renter’s insurance policy as part of the lease agreement.
By making sure tenants have insurance for their personal belongings, landlords essentially absolve themselves of any liability if a tenant’s personal property is stolen or damaged. Landlords, meanwhile, must carry insurance to cover any damage to the building/property. Landlord’s insurance is different from both renter’s insurance and house insurance.
No law requires homeowners to buy house insurance. However, if you buy a home with a loan through a bank or mortgage lender, the lender will require you to insure the property fully. Since the lender technically ‘owns’ a percentage of the property, they can leverage it as collateral if the homeowner defaults on their mortgage.
They are protecting themselves from loss by requiring a home insurance policy. If you have enough cash to buy a house outright, you could technically go without house insurance. Of course, doing so is a significant risk and is never recommended.
What About Liability Coverage?
So far, we have focused on what types of damage or replacement costs a renter’s insurance policy or house insurance policy would cover. However, while property protection is indeed the top priority for most people when it comes to purchasing insurance, another essential factor to consider is liability coverage. If a guest slips on your kitchen floor and injures themselves while visiting your home or apartment, they could potentially hold you liable and come after you for damages.
The good news is that the standard renter’s insurance and house insurance policies will incorporate liability coverage. This part of the insurance policy would cover medical costs for anyone injured at your property, as well as coverage for a certain amount of legal fees or damages.
The Recap: Renters Insurance vs House Insurance
So, to recap, what types of coverage are included in the average renter’s insurance or house insurance policy? Below, we’ve included a simple list to help you understand the difference between these two types of coverage.
Furniture, electronic devices, appliances, and other belongings may be damaged if something happens to your home or the property you’re renting. Both house insurance and renter’s insurance includes coverage to provide for the replacement cost of these items. Note that for especially valuable assets, including some jewelry or artwork, you may need to purchase additional insurance (called a ‘rider’) to make sure you are fully covered.
This type of coverage shields you from liability if someone is injured while visiting the property for which you are responsible. This coverage can reimburse both legal costs and medical bills. It is included in both homeowner’s insurance and renter’s insurance.
If you lose the use of your house or your rental home, this part of your coverage will cover your additional living expenses for a specified period. An example would be if your home is rendered uninhabitable by smoke damage and you needed to stay in a hotel for a few weeks while the property was being cleaned and restored. Additional living expenses coverage is part of any homeowner’s or renter’s insurance policy.
This type of coverage is only included in house insurance; it is not a part of renter’s insurance. It covers repairs, restorations or replacements for property damage to your home’s structure.
How much coverage you have in each of these areas will depend on factors such as the size/value of your home, the risks inherent in the area where you live, and the scope/value of your personal property. Working with an experienced insurance broker will help you determine how much coverage you need. To start shaping your policy, or to ask any questions concerning renter’s vs. house insurance, contact Guild/HMS Insurance.