The Average Renters & Homeowners Insurance

Homeowners insurance covers a structural fire.

Renters insurance is purchased by those who rent their homes, while homeowners insurance is purchased by those who have a mortgage on their homes. Average renters and homeowners insurance policies typically cover personal property damage, liability and theft. Additional riders to the policies differ, in that homeowners can get coverage for mortgage payments if they become disabled, where renters insurance does not offer a similar clause. Homeowners insurance also covers structural damage while renters does not.

Destruction of Property

Both renters and homeowners insurance cover replacement costs of personal property damaged or destroyed by various events including house fires, certain types of flooding and roof cave-ins that harm belongings. The actual property itself is generally covered by homeowners insurance, but is not covered by renters insurance. For example, a house fire at a home with tenants would be covered through both policies. The renters insurance would replace personal belongings, such as clothing and furniture, while the homeowners policy would kick in to pay for the home to be repaired.

Liability

Personal liability coverage is usually covered by both policy types. Liability issues include a guest getting injured on the property through a fall, or during a criminal assault. If a dog on the property bites a neighbor, the medical bills would be paid by the liability portion of either the renters or homeowners policy, depending on who was living in the home.

Criminal Action

The victims of a burglary in which personal property is stolen or damaged recoup their losses through their renters or their homeowners insurance depending on what the victims' living arrangement is at the home. Both types of policies typically require a police report before they will pay for losses due to such criminal activity.

Requirements

A primary difference between a homeowners and a renters policy is in whether they are required. Mortgage companies require homeowners to maintain insurance or post a substantial cash bond for the life of the loan. Renters insurance is not typically required of tenants, though some apartment complexes do recommend the tenant purchase coverage when they move in. If an event occurs with tenants in the house, the homeowners policy pays for the structure; however, it does not cover the tenant's personal belongings.

Coverages

Renters insurance and homeowners insurance each have deductibles. A deductible is the amount you will pay toward coverage of an event. The policy picks up the rest. Mortgage companies sometimes require a minimum deductible to ensure you will continue to pay the mortgage as the repairs take place. Both policies have policy limits that are chosen by the customer. For example, a customer may choose a policy limit of $1,000 for personal injury medical bills. This means if someone is hurt on the property, the policy will pay up to $1,000 for the injured party's medical bills. Personal property limits are also chosen by the policy owner and can range from $10,000 to $100,000. Both renters and homeowners policies also offer riders at an additional cost to cover jewelry or furs. The premium is based on the limits you choose.

References

• Rocky Mountain Insurance Information Association: Renters Insurance Q & A
• Insruance Providers: How Does Homeowners Insurance Work