Renting vs. Buying – 3 Important Home Insurance Coverage Distinctions
From an insurance perspective, there is a big distinction between renting and buying a home. Owning a home is a larger financial responsibility, thus requiring more comprehensive insurance coverage. Rental insurance is also a valuable form of protection for renters. The following will outline some important considerations about both forms of insurance coverage.
3 Important Distinctions About Home and Renters Insurance
Here are some important points to keep in mind when it comes to the differences between these two similar, but very different forms of insurance:
Insurance Requirements
One of the big differences between home and tenant insurance is that it is mandatory for homeowners to have a policy to secure a mortgage from a mortgage lender. It is not mandatory for renters to have tenant insurance to rent a place. However, it is highly recommended that renters obtain a tenant insurance policy to ensure they have coverage (more in this in the coverage section below).
It is also important to note that many rental companies, specifically in condo buildings, are now requiring that renters have proof of insurance as part of their rental application and agreement.
Insurance Rates
It’s no surprise that rental insurance is cheaper than home insurance. On average, its costs about $300 annually for a tenant insurance policy, compared to about $800 or more annually for a home insurance policy. The major spike in rates is largely due to the type and amount of coverage that is required for homeowners.
Here are 3 Money Saving Tips To Lower Your Home Insurance Rates
Insurance Coverage
The big difference between home and renters insurance is what is covered under your insurance policy – an important distinction that all renters need to understand. Many renters mistakenly assume that their belongings are covered under their landlords insurance should something happen – This isn’t the case. For more information, check out Renting and Insurance – Why Renters Insurance Is A Must Have
Renter’s insurance coverage protects the renter’s personal belongings in case of fire, water damage, and other acts, whereas homeowners insurance covers the entire property that you own. It covers you for damage to your personal belongings, as well as the structure of your home and other elements that are located on your property. This also means that if you rent, your landlords insurance only covers the damage caused to the building structure and property – It does not cover the renter’s personal belongings.
Whether you are a homeowner or renter, it’s important that you understand the differences between renters and home insurance.