Renters Insurance vs. Homeowners Insurance: What’s the difference?

September 14, 2020


RHI Agency Team

Renters Insurance vs. Homeowners Insurance: What’s the difference?

We live in a world where unpredictable things happen all the time and there is a need for protection for what may come or not. The most valuable thing that comes after your life is the place you and your family live in.

About 61.5 percent of the Americans own homes and the rest lives in rented buildings. Whether it is owned or rented, home is everyone’s safe place which is valued very much. So, here we will be discussing Renters insurance and homeowners’ insurance, the 2 ways in which you can protect the place you live in.

Renters insurance and homeowners insurance both provide financial protection for the property you live in against the premium amounts you pay. The difference between these two policies can be seen in the type of property damage they cover. Renters insurance is bought by tenants and only covers damage to the personal properties and not the building they live in. Whereas homeowners’ insurance is for those who own their buildings, and it covers the damage done to the building as well as to the personal belongings in the building.

The main difference – Dwelling coverage

The main difference between renters insurance and homeowners’ insurance is that homeowners’ insurance has an additional benefit of dwelling coverage. In other aspects, the policies are almost the same

Homeowners insurance has five beneficial coverage types: personal liability, personal property, medical payments, additional living expenses, and dwelling. Renters insurance on the other hand also has the same features except the last, making it a little cheaper compared to homeowner insurance.

Dwelling coverage: the word dwelling refers to the structure of the building you live in. and dwelling coverage includes all the physical damages done to any part of the building like roofs, walls, floors, doors, etc.

Even though the insurance policies might slightly differ depending on the agency providing it, most homeowner insurances include a general set of perils for your dwelling. Lightning and fire are the most expensive perils whereas wind and hail are the most common ones afflicting homeowners.

The common benefits of Renters and Homeowners insurance

Apart from dwelling coverage, renters insurance, and homeowners insurance have some common benefits that are very comforting and financially helpful.

Personal property coverage

Personal property can be anything ranging from your clothes to heavy furniture and electronic items like T.V. Both the renters and homeowners insurance policies covers the insured person for the theft or damage of these personal properties.

In 2018 alone, 5.2 million cases of larceny-theft were reported in the US so it is highly recommended to be insured so that there will be something to hold on if you ever become the victim.

Usually, when you buy the homeowners’ insurance, the property coverage will be set to 50 percent of the dwelling coverage by default, which can generally be changed before buying it. But, when you buy a renters insurance, selecting your property coverage will be the biggest challenge you will be facing, as it is the main feature of the insurance policy.

Note: Certain items will have a coverage sublimit and will be covered differently from the common items. For example, if the sublimit of your jewelry is $2000, the insurance company will only pay you that amount even if your overall personal property limit is about $20,000. 

Personal liability coverage

Liability coverage is a feature that protects the tenants or owners from the legal headaches due to property damage or bodily injury caused to others. This can be very useful if you have irksome people living around you.

The default amount for both renters and homeowners insurance is $100,000, which can usually be raised by paying small amounts.

Medical payments coverage

In this feature people who have homeowners insurance or renters insurance will be covered for a certain amount of their medical expenses. It is on a no-fault basis and covers for injuries that happened at your home or rented apartment. Usually, the coverage is set around $2000.

Additional living expenses coverage or ALE

ALE is a feature of both homeowners insurance and renters insurance in which the policyholder will be covered for the expenses living outside his home or rented home. Both the categories will be paid an amount for abnormal expenses of living outside the home, in case it becomes inhabitable.

For example, if a fire broke out in your building and you are forced to live in a hotel due to the smoke in the building, the hotel expenses will be covered under ALE. The coverage limit of ALE can depend on a certain amount of money or a certain period of time (say 3 months).

To know more about the homeowners’ insurance and renters insurance you can contact RH Insurance Agency in America. We have about 20 brands of insurance companies under our wing and is one of the trusted agencies in America with 20 years of experience in helping people lead a better life.

Conclusion – Need for insurance

Whether you are living in your home or a rented space, insurance will make you feel safer and financially secure. Unpredictable things happen all the time and it is always better to be prepared for the worst. Knowing that your property or your belonging are insured will help you lead a tension-free, happy, and better life.

With a large number of thefts and property destructions in America every year, it is only practical that you go for a renters or homeowners insurance depending on the place you live in.

So if you haven’t bought an insurance policy yet, hurry up and go for one before it is too late. 


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