Understanding the Differences Between Home and Renters Insurance

If you were told that a disaster was to strike upon your home on this date, you’d be smart enough to make every possible attempt to save all you could when exiting the building. But what if you could save it all, including the building?

Disasters like lightning, hail, explosion, or fire are just something you can’t put a date on; they’re incalculable in most cases. For this reason, it’s suggested that homeowners and renters safeguard their respective belongings using insurance policies.

What is Home Insurance?

A home insurance policy is approved against the house owner’s name. The insurance amount is inclusive of the cost needed to rebuild the residence in the event of an accident as well as that of the personal belongings in the house, such as clothing, furniture, appliances, and dishes. In simpler words, it covers the building that you’re residing in its entirety.

For example, if your home costs $250,000 to rebuild and $120,000 are needed to replace the interior items, the home insurance provider is likely to insure your property for $370,000. This makes homeowners insurance typically more expensive than renter’s insurance. Lenders often require homeowners to have home insurance if they wish to take out a mortgage.

Note: Local construction costs and square footage of the property are known to be two major factors impacting the total sum needed for rebuilding. To estimate the amount of insurance you need for your property, simply multiply the square footage of the property with the local constriction cost per square foot.

What the Homeowners Insurance Covers

A standard home insurance policy is expected to cover:

1. Liability Insurance

The most important of the lot is liability insurance which pays for property damage and medical expenses your family members cause to other civilians. For example, your liability can pay out if your child knocks down the neighbor’s window or your dog bites someone on the street.

Moreover, liability insurance can also pay for legal defense in cases where the homeowner has the chance of getting sued due to damage or injury. It ideally covers everything you could possibly lose in a lawsuit; for this reason, the liability limits mentioned on home insurance policies start with $100,000 but can be upped to $500,000.

2. Personal Belongings

This insurance policy pays out to repair or replace the homeowner’s personal belongings in case of a problem (such as fire or theft) that’s covered by the policymakers.

3. Coverage for Additional Living Expenses

If your home is no longer livable post the accident, this insurance policy pays for the ‘loss of use’ expenses such as pet boarding, hotel bills, means, and other accident-related costs.

4. Dwelling

The insurance policy pays to rebuild the structure of the building if it’s damaged by a cause.

5. Medical Payments

If a guest were to sustain a minor injury on the property, the insurance would offer a small coverage of no more than $5,000.

What is Renter’s Insurance?

Before renting out their property, landlords are expected to insure the property. It’s wrong for a tenant to assume the landlord’s insurance will cover the contents within the property or the elements lying outside of it in case they’re destroyed or damaged.

Renter’s insurance is meant for tenants who reside within the building on rent, i.e., they don’t own the house. This insurance policy protects the belongings of the renter within the building. The liability is owned solely by the tenant; at no point can it be claimed as the landlord’s responsibility.In case the contents are lost or damaged while they were within the house, the insurance provider reimburses the cost for replacement; for example, items stolen from the car standing outside of the garage are covered in renter’s insurance.

What the Renters Insurance Covers

The renter’s insurance is largely broken down into three chunks:

1. Liability Insurance

This insurance pays for property damage and injuries caused to others. For example, liability insurance would pay the medical bills if your guests injured themselves while staying in your apartment. It also pays for legal defense in an incident when the landlord sues you because of an accident.

2. Personal Property Coverage

The items that you have accumulated in your home are covered under personal property coverage. This pays for replacement or repair if the items are damaged or stolen.

3. Additional Living Expenses

ALE, sometimes referred to as loss of use, covers caused by being unable to live in a house due to the damages caused by a problem exclusively covered by the renter’s insurance.

Note that the landlord’s insurances cover the damages born to the actual building. A renter’s insurance only protects the belongings of the tenant, which they may not be able to afford to replace otherwise.

The Key Differences between Home and Renter’s Insurance

Whether you’ve rented out your home or reside in it yourself, the property itself must be protected with insurance. Both home insurance and renters insurance require regular down payments, either as monthly installments or annual payments. In addition, they both demand the payment of deductibles for a claim unless stated otherwise in the policy. But most importantly,the policy must always be in good standing to guarantee that it pays out upon a claim.

In terms of property and its contents, home insurance applies to those who own the home and wish to cover the building as well as its contents. However, in a rental, it’s the responsibility of the landlord to insure the home, whereas the renter is responsible for insuring the property’s contents.

Get Home Insurance for Your Asset in Indian Orchard

Western Mass Auto Insurance is a full-service insurance provider in Indian Orchard, Springfield, Massachusetts, that started in 2014. They provide insurance services based on their 50 years of experience in the field, including home insurance and apartment insurance or renters insurance at the best prices. Choosing Western Mass Auto Insurance as your home insurance advisor makes it easier for homeowners and landlords to get home insurance in Indian Orchard since they offer onsite RMV services, online policy management, best pricing, premium customer service, quality insurance policies, and customized policies.