Homeowners Insurance vs. Renters Insurance

Starting point

Homeowners insurance and renters insurance are both personal property and casualty policies, but they are designed for different situations. Homeowners insurance is generally purchased by people who own the residence they live in. Renters insurance is designed for tenants who lease a home or apartment.

The two policies share several common building blocks: coverage for personal belongings, personal liability, medical payments to others, and additional living expenses if the residence becomes uninhabitable after a covered loss. The critical difference is that homeowners insurance also covers the physical structure of the home, while renters insurance does not.

What homeowners insurance generally covers

A standard homeowners policy typically bundles several coverages together. Actual coverage, limits, and exclusions are defined by the specific policy contract, and endorsements can add or refine coverage for specific perils and property types.

• Dwelling coverage for the physical home structure and attached items such as built-in appliances
• Other structures such as detached garages, fences, and sheds
• Personal property inside the home, often on a named-peril or open-peril basis
• Loss of use / additional living expenses if the home becomes uninhabitable after a covered loss
• Personal liability coverage for bodily injury or property damage you or a household member may be legally responsible for
• Medical payments to others regardless of fault, up to a small limit, for specific covered incidents

What renters insurance generally covers

Renters insurance is designed to protect the tenant, not the building itself, which is generally the landlord's responsibility to insure. Even if the landlord carries a policy, that policy is designed to protect the landlord and the building, not the tenant's belongings or the tenant's personal liability.

• Personal belongings up to a chosen limit, subject to policy terms and sub-limits for specific categories
• Additional living expenses if the rental becomes uninhabitable due to a covered loss
• Personal liability coverage for covered incidents on and, sometimes, off the rented premises
• Medical payments to others in certain covered situations

Key differences at a glance

It can help to line the two policies up side by side. Both provide personal property, liability, and loss-of-use protection. Only homeowners insurance provides dwelling and other-structures coverage. Renters insurance tends to be less expensive because the tenant is not paying to insure the building.

• Structure coverage: only on homeowners policies (dwelling and other structures).
• Personal property: covered on both, with limits set to the tenant's or homeowner's needs.
• Personal liability: covered on both, up to the chosen limit.
• Loss of use / additional living expenses: covered on both, subject to policy terms.
• Cost: renters insurance is usually significantly less expensive because it does not insure the building.

Where landlord insurance fits in

Landlords who own property they rent to others usually carry a landlord or dwelling policy rather than a homeowners policy, because the property is not owner-occupied. A landlord policy generally covers the physical structure and can include liability coverage related to the ownership and rental of the property, but it does not cover the tenant's personal belongings.

Many landlords also require tenants to carry a renters policy so the tenant's belongings and personal liability are covered by the tenant's own insurance rather than falling on the landlord.

How to decide which applies

If you own the home you live in, a homeowners policy is generally appropriate. If you rent, a renters policy is designed for your situation. If you own property that you rent to others, a landlord policy is usually the right form. If you own a condo, a condo (HO-6) policy is designed for the walls-in structure and personal property, and it usually works alongside the condo association's master policy.

A licensed insurance professional can review your specific circumstances and help you compare limits and options across carriers.

Reviewing your coverage

Whichever policy applies, it is worth reviewing coverage limits at least once a year and after major life changes such as moving, remodeling, buying valuable items, welcoming a new household member, or changing home-based work arrangements. Those events can affect the right amount of personal property, liability, and additional living expenses coverage for your situation.