No matter where you live, you should consider insurance to protect your home and belongings. A flood, fire, earthquake, or other natural disaster could happen at any time and take away everything you own—resulting in losses exceeding hundreds of thousands of dollars. While homeowners or renters insurance is not required, they offer protection and peace of mind. What is the difference between homeowners insurance and renters insurance?

Key Differences

When it comes to homeowners insurance vs. renters insurance, the main difference is what is covered. If you rent a place, then you will want renters insurance, which will cover the following:
  • Your belongings from theft or damage
  • Liability in case someone is injured on your property
  • Living expenses if your dwelling is uninhabitable
Your landlord should cover any damage to the structure under a separate policy. Renters insurance policies are usually limited to $20,000 to $30,000 in coverage and are relatively inexpensive, at around $15 per month. If you own a home, then you will want homeowners insurance. Homeowners insurance covers the above, as well as damage to the actual home. You can also get additional coverages for home offices, high-end electronics, jewelry, and damages caused by floods and earthquakes. If you are applying for a mortgage on a home, the lender will likely require homeowners insurance before the loan is approved. What is another difference between homeowners insurance and renters insurance? The cost. Homeowners insurance covers the cost of a home and is, therefore, more expensive than renters insurance. There are many factors involved in calculating the premium, including:
  • Value of the home
  • Age of the home
  • Location
  • Risk of natural disasters
The cost can vary widely, from roughly $650 a year to more than $2,000 a year. Work with your insurance provider to determine how much coverage you need and a deductible that works for you. Now that you know the difference between homeowners and renters insurance, you can choose the right policy to fit your needs.