The Difference Between Renters and Homeowners Insurance

Congratulations, you have just got your first place! You are first going to need to get some insurance to make sure you are covered in the event of an accident. However, when you go to check out an insurance website, you see that there is both renters and homeowners insurance. Which one is right for you? Carry on reading to find out!

The Basics

The first difference can be found just by examining the names of the two policies. Homeowners insurance is for the people who have bought a property to live there. You may not always have to take out an insurance policy on your home if you buy it outright, but you will have to take one if you have a mortgage as it is likely to be one of the clauses of the mortgage agreement.

Meanwhile, renters insurance is for anyone who is living in a property but does not own the structure; i.e. they are renting it from the owner. This type of insurance helps to cover your personal belongings within the property. You need to make sure you know what does renters insurance not cover as you may need to purchase additional policies to cover them.

The Cost

Unsurprisingly, these policies vary greatly in terms of cost. If you are taking out renters insurance, you can expect it to be much more affordable when compared to homeowners insurance simply because there is less that can go wrong and you are covering much more space. A house tends to be much bigger than an apartment and any accidents which occur will most likely fall to you as the homeowner to fix and repair.

In an apartment, the vast majority of repairs and damages will be covered by your landlord so therefore, it makes sense that renters insurance can be much lower. Just remember to know exactly what you would be responsible for. You don’t want to accidentally cause a problem which will be massively costly for you to then fix.

Do You Need It?

As discussed above, most homeowners don’t need to purchase an insurance policy unless it is stipulated by your mortgage contract but it can be advisable to do so anyway, as it may help you get some sort of cover in the event of a disaster.

While you might think that most renters choose to take out renters insurance, the truth is very different. It is thought that less than half of renters take out this policy as they either don’t understand it or they think that they won’t need it. Many landlords also don’t yet have a requirement for you to have renters insurance as part of their leases.

You may be renting a tiny place and your possessions may not mean that much to you, but if you have many personal belongings which you would be sorry to lose, you should definitely consider taking out renters insurance. The right policy will barely make a dent in your monthly budget and you can rest a little easier knowing that your belongings are protected.

The differences between renters and homeowners insurance might seem a little difficult to understand at first, but a quick bit of research will show you that they are in fact quite different. No matter your circumstances, one of these policies will be able to protect you and give you some piece of mind. If you don’t have either of them, take a look into the policy best suited for you now as you do not know when a disaster could occur which could leave you with some pricey bills to pay.