By: Annie Edward
It’s not going to be a long until you rent out your own place and eventually buy a home. It’s important to protect your home when buying it, which is why most buy insurance. There are two insurances available when it involves protecting your home: homeowners and renters. Knowing the difference and similarities, in addition to what each insurance provider can help you in the long run and be beneficial in protecting your home.
RENTER’S INSURANCE (https://youtu.be/llXiZrgAQ_A )
Renter’s insurance is designed for people in rented spaces and is provided by the owner and purchased as part of the lease agreement. In order to understand renter’s insurance, let’s look over what it covers:
Privacy Property: This is 80% of the coverage provided by renters insurance (Bergen). Before giving you the lease, the owner will require you to estimate the cost of your valuable items and the price to replace them, which then becomes the coverage limit. The coverage limit comes in handy when there is any damage to your personal item-furniture, clothing, and other-within your coverage limit. However, the protection is only covered through certain risks or known as perils, such as a fire, and not provided in all situations (Allstate).
Personal Liability: This is the next major part of the renter’s insurance and protects you from any unwanted damage and lawsuits from the leaser.
According to the NAIC (National Association of Insurance Commissioners), renter’s insurance costs about 10-15 dollars per month. The low price of this insurance comes from the difference of how much coverage it provides.
HOMEOWNER’S INSURANCE
Homeowners insurance is a coverage program designed for those who have their own home (condo, home, anything you own). The homeowner’s insurance is usually required for those with mortgages and is common insurance for those within that database. In order to understand what homeowner’s insurance is, let’s look at what it covers:
Dwelling Coverage: This is the coverage of any actual damage on your property, which includes a broken roof, damaged fences, and so on. Like the privacy property policy in renter’s insurance, there is a peril, where the home insurance has a list of incidents of what it covers. For example, if your house roof was damaged because of a tornado, which is on the perils list, it would allow for the dwelling coverage.
Personal Property: This policy protects any belongings inside your home, such as a computer. Note that this is always included in the dwelling coverage, but again depends on where you are getting your insurance from.
Personal Liability: The same as concept policy as renter’s insurance, but for accidents that happen within your home, and not rented place.
The price for homeowner's insurance is relatively higher than renter’s insurance, around 300-1000 dollars, because of dwelling coverage. The dwelling coverage is the main difference between the two types of insurance because more coverage means a higher price tag.
THE RIGHT ONE
Obviously the correct insurance is dependent on your housing situation. If you are renting a place, then a renter’s insurance may become a mandatory action, however, if you have a mortgage, your lenders will require you to have a homeowner’s insurance (Bergen). However, there might be situations in which you debate between the two types of insurance, so it’s best if you know what each insurance has to offer in order to get the best deal.
Works Cited
Bergen, Amy, et al. “Homeowners Insurance Vs. Renters Insurance - Which One Is Right For You?” Money Under 30, www.moneyunder30.com/homeowners-insurance-vs-renters-insurance.
“NAIC News Release: NAIC Releases Homeowners Insurance Report.” National Association of Insurance Commissioners, www.naic.org/Releases/2019_docs/naic_releases_homeowners_insurance_report.htm.
“What Is Renter's Insurance .” AllState , Oct. 2019, www.allstate.com/tr/renters-insurance/what-does-renters-insurance-cover.aspx.
I learned about renters insurance in Personal Finance, but not home owners insurance. I was astonished on how much both of the insurances could potentially cover for an individual. However, I was curious on the fact that a majority of American Citizens are under-informed about these insurances. Is it possibly, from a business perspective, a revenue loss if the home owner/ renter, does have insurance incase of a series of unfortunate event? Because being covered for personal liabilities or dwelling coverage sounds too goo to be true to give up.
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