For prospective home buyers and renters who are new to the market, competition can be quite stiff in busy cities such as New York or international markets, such as houses for sale in Toronto. As buying or renting can be quite expensive, protecting your belongings and your home after the transaction is complete should be a no brainer. However, deciding what kind of insurance you need for your property, or whether you need insurance at all, can be more complex.
Here’s what you should know about renters’ and homeowners’ insurance when shopping for a policy.
What do Homeowners’ and Renters’ Insurance Policies Cover?
Although renters’ and homeowners’ insurance may seem quite similar, there are a few key differences between the two. The main one is that homeowners’ insurance is designed to both cover the contents of the home as well as its outer structure; however, the latter is typically excluded from renters’ insurance, as the cost of repairs for the home falls under the landlord’s financial responsibility. However, both forms of coverage can extend to items that you own even when they are not on your property.
Both homeowners’ and renters’ insurance are designed to keep you protected from liability in case of any accidents that may occur on your property that may lead to a visitor getting injured. Both kinds of insurance will also cover you if you need to find temporary accommodations in case you are unable to live in your current home for a number of unforeseen reasons, such as a fire. This is particularly important for renters to note as it is a common misconception that your landlord would be required to help you in these situations – however this is not the case.
There are also certain damages that neither policy type will cover that you’ll need additional coverage for such as car accidents, or, in the case of homeowners’ insurance, repairs from natural disasters such as flood; for renters, this kind of damage again falls under their landlord’s purview.
Renters’ Insurance Tends to be Cheaper
Because it covers a wider array of more complex damages, rather than just contents, homeowners’ insurance comes at a higher price point than renters’ policies.
When calculating your homeowners’ insurance premium, your insurer will take a number of risk factors into account, such as the age of your property, whether you have animals, and other potentially harmful features, such as its location near a flood plain.
Renters’ policies, on the other hand, take fewer factors into account and predominantly look to assess the value of the policyholder’s belongings.
While renters’ insurance is objectively cheaper than homeowners’ insurance, keep in mind that both the renter and the landlord need to pay for insurance on the property, effectively sharing both the responsibility and the cost of maintaining the home.
Renters Generally Have More Flexibility
Another difference between homeowners’ and renters’ insurance is the flexibility that renters’ have when it comes to deciding whether or not to buy coverage. Homeowners, on the other hand, require home insurance in order to secure a mortgage. However, just because insurance may be optional for renters, it’s still an important investment; the full cost of replacing all of one’s belongings can be staggering, not to mention the costs of living off site in the case of a fire or other displacing incident.
Getting Insurance for Your Property
As with any other kind of insurance or financial commitment, don’t just settle on the first policy quote you receive; it’s wise to look around for coverage that best meets your needs while staying within your budget.
If you want to learn more about what homeowners’ insurance and renters’ insurance cover, check out the usa.gov’s article on property insurance, which also includes info on other kinds of insurance you may need to protect you property.
Purchasing or renting a home can be quite an investment in hotter markets like Chicago or Toronto condos. Make sure your investment is protected with the right insurance.
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