Regardless of your personal situation, ensuring that you have insurance covering what is important to you is a wise decision. All it takes for you to see the value of not having to rebuild a portion or all of your life back from scratch is one bad experience, such as property damage.
When it comes to insuring our possessions, the main types that are available are homeowners and renters insurance. But what are the main differences between homeowners vs renters insurance? Which should you take out?
Read on to find out the answers.
Similarities Between Homeowners vs Renters Insurance
In both homeowners insurance and renters insurance, either monthly or annual payments are necessary, and insurers will pay out if a claim meets the requirements of the policy. You will need to pay a deductible when claiming in both cases, however, what is covered in homeowner and renters varies.
What Is Homeowner Insurance?
Homeowners insurance primarily covers any damage to the structure of your home and any associated buildings. It also covers personal liability should, for example, someone have an accident in your home and, depending on your policy, it can include your belongings.
It is not a legal requirement, however, as in most cases the greatest asset and expense one has is their property, it is wise to ensure that you have it. If one takes out a mortgage, it is often a requirement of the mortgage lender. Your mortgage lender may even have a preference for the type of coverage that you should have, therefore it is best to clarify this before taking out any policy.
Homeowners should take out insurance with the worst-case scenario in mind, therefore make sure your policy covers the full value of your property and any additional extras you may wish to include. It is also worth noting that depending on where you live certain natural disasters may not be covered or will be at a premium.
The average cost of homeowners insurance in the US is $1631 per year.
What Is Renters Insurance?
One difference between homeowners insurance vs renters insurance is that renters insurance is available to all. It covers your belongings, personal liability, loss of use, and medical protection. Renters insurance is becoming more common as many landlords chose to opt-out of including their tenant’s belongings in their policy. Therefore, it is worth doing your own due diligence and confirming if this is the case for you.
Should you not be covered by the homeowners’ insurance, any damage or loss of your belongings due to theft, fire, or any other reason would only cover the property and not your goods.
Some policies include things such as additional living expenses under the loss of use. If your house became inhabitable your insurer would pay for expenses deemed above and beyond your normal outgoings.
It is easy to think that if you do not have many things of value, renters insurance won’t be necessary. In reality, those on a lower income are often the most affected should disaster strike. Therefore it is worth doing a thorough inventory of your goods before taking out a policy. You may be surprised just how much your belongings are worth.
The average cost of renters insurance in the US is $164 per year.
No Price on Peace of Mind
As we have seen, knowing whether to take out homeowners vs renters insurance depends on your circumstances. One clear thing is you should endeavor to know exactly what is covered so that you avoid any unwelcome surprises just when you least need them.
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