Let’s say you’ve rented your place for a few years, and now you’re looking to buy your own home. You’re familiar with renters insurance, but eventually you’ll need a different type of policy to cover you. What should you expect? Show
Let’s take a quick look at the differences between renters insurance and homeowners insurance.
Homeowners insurance vs. renters insuranceHold onto your seats, because this might come as a shock: Renters insurance (referred to in the industry as an HO4 policy) is for renters, and homeowners (HO3) and condo insurance (HO6) are for policyholders who own their homes. Not surprisingly, you’ll pay a bit more to insure a place you own than you’d pay to insure a comparable rental property. (We’ll cover costs in more detail below.) Quick reminder: Lemonade offers HO3 andHO6 policies for homeowners, and provides HO4 coverage to renters. What does renters insurance cover?If you rent, damage to your building itself is part of your landlord’s insurance policy, not your renters coverage.Renters insurance coverage includes everything that homeowners HO3 insurance covers, except for damage to the rental property itself—because you don’t own it. Property damage coverage is part of your landlord’s insurance policy instead. Renters insurance covers things like:
It’s very important to note that your renters insurance policy covers your belongings against theft anywhere in the world—whether you’re at home, on the subway, or visiting your favorite restaurant. You should also read your insurance quote carefully to look for exclusions. These are things that are not covered by your policy. For example, renters insurance usually doesn’t cover pests like mice or (eek!) bed bugs. It won’t include damage to the personal property of other people who live in your rented home (unless they are a blood relative, spouse, or adopted child) so your roommates each need their own renters insurance policy. What does homeowners insurance cover?A typical HO3 policy covers a lot, like damage to your home and your personal property, personal liability, living expenses, and medical fees. But you’ll still need to check your policy for exclusions. Some common things that you wouldn’t be covered for include:
You can buy individual insurance policies to cover any gaps in your insurance, like flood insurance or earthquake insurance. If you have expensive items, like high-end jewelry, expensive cameras, or specialty equipment, you’ll probably need additional coverage for them because a standard homeowners policy won’t cover the replacement cost. The industry refers to this as “scheduled personal property coverage,” but at Lemonade we simply call it “extra coverage.”
Costs of homeowners insurance vs. renters insuranceIn general, you can expect your renters insurance quote to be less than for homeowners insurance. That’s because homeowners insurance includes the building structure itself, which isn’t the case for renters insurance policies. In both cases, the cost of your insurance policy depends on a few factors, including:
All these factors make it tough to tell you how much you might have to pay. But we can tell you that on average, renters insurance in the US generally costs between $15 to $30 per month, or $180 to $360 per year, according to the National Association of Insurance Commissioners. Meanwhile, the average annual cost of homeowners insurance is $1,680 per year, or $140 a month. How much renters or homeowners insurance coverage do I need?If you’re a homeowner, you’ll need to make sure you’re adequately covered to rebuild your home.“How much coverage do I need?” is a tricky question, and one whose answer depends on your personal situation, as well as your tolerance for risk. As a baseline, homeowners insurance needs to cover the amount it would cost to totally rebuild your home. For renters insurance, it’s entirely up to you (but the coverage you choose should be aligned with the value of the stuff you own). Here are some things to consider:
When it comes to deciding how much insurance to pay for, the main thing to think about is how much your peace of mind is worth. It’s often worth paying a little more to know that you have enough insurance to cope with (almost) anything that comes your way. Lemonade and your home insurance needsThere’s a lot to think about before getting insurance, but it’s worth it to rest easy without worrying about the “what ifs”. Whether you’re renting or you own your own place—and whether you want total coverage for every eventuality, or you’d prefer to go basic and keep the costs as low as possible—Lemonade makes it easy to buy and manage home insurance. You can use the Lemonade app or website to get a quote, upgrade your coverage, file a claim, and review your homeowners or renters insurance policy. Is homeowners insurance different from renters insurance?Homeowners insurance is for those who own their home or apartment, and it covers both their personal belongings and the structure of the home. Renters insurance is purchased by tenants, and it covers damage to or theft of their personal property, but not damage to the building itself.
Why is renters insurance so much cheaper than homeowners insurance?“Right off the bat renters insurance is cheaper because it's simply insuring less things,” said Fabio Faschi, property and casualty team lead at Policygenius. “Renters insurance is covering your personal property and liability, whereas homeowners insurance is covering the actual structure of the home.
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