Homeowners and Renters Insurance.
These insurances protect your home and personal property from damage or loss. It is insurance in case someone gets hurt while on your property. For mortgage holders, this type of insurance is mandatory. In addition, certain management companies that rent out homes may also require their tenants to have this type of insurance.
Homeowners’ and renters’ insurance pays for damage to the entire property (house, garage, other buildings) as well as compensation for damages (e.g. repairs). In addition, insurance covers bodily injury and property damage caused to others through negligence, accidents, and provides limited coverage for collections of money, gold, jewelry, stamps and coins.
The cost of insurance depends on the value of the home and the valuables covered by the policy.
What homeowners insurance covers
This is the key difference between homeowners and renters insurance: only homeowners insurance includes home insurance, which covers damage to the actual structure of the home.
This includes everything from a broken door or window to complete demolition of the building. Dwelling coverage covers other structures on your property, such as a fence, garden or garage.
Not all losses qualify for coverage. Most companies have what’s called a “named peril” policy, which lists the relevant risks or “covered events”-losses your insurance will pay for repairs. The list usually includes weather events such as high winds and hail, two of the most common perils.
Other covered events can range from smoke, fire, falling ice and water damage to vandalism and theft.
Personal property insurance protects things inside your home. Even if the item is not physically in your home – for example, if your laptop or bicycle is stolen from your car – the policy takes effect.
For homeowners, the price is usually included as a percentage of your home’s coverage, but you can increase or decrease the amount as needed before purchasing the policy.
If someone is injured in your home or if someone sues you for damaging themselves or their property, this is where personal liability insurance comes into play. The amount is flexible. For example, pet owners whose pets are prone to aggression often end up paying more.
This insurance covers medical expenses if someone gets hurt on your property and needs medical attention. Unlike personal liability, medical insurance is provided without fault; you will not be held liable.
Additional living expenses
This universal phrase simply means that you will have money for lodging, including hotel stays or rent if you need to vacate your home after a covered peril.
What homeowners insurance doesn’t cover
Floods and earthquakes are severe enough to require a separate policy. They are almost never included in homeowners’ coverage. If you live in an area prone to floods or earthquakes, you can get extra coverage for a fee.
And insurance companies won’t cover homeowners’ negligence: damage that could have been prevented with basic maintenance and care.
The rules also don’t cover government demolition or power outages (if the power source is outside your home).
What renter’s insurance covers
This is basically what you pay for. Renters insurance protects your personal property – electronics, clothing, equipment and other valuable items.
Before you buy a policy, you’ll take an inventory of your property and determine how much it costs to replace it. This approximate amount will be your coverage limit.
You may have the option of choosing “replacement cost” coverage or “cash value” coverage (the cash value of your property). Replacement value means a larger payout if your items are damaged or destroyed, so the policy is nominally more expensive – $20-50 more per year.
Automobiles are not included in the policy because they are covered by your auto insurance. However, items stolen from your car will be covered even if the car is not in your possession at the time.
This coverage applies if someone is injured on your property, just like homeowners insurance. It also protects you from a homeowner’s lawsuit if you cause accidental damage to the building.
Medical benefits and additional living expenses
Both homeowners and renters get this coverage.
What renter’s insurance doesn’t cover
Because renters do not own the buildings they live in, their insurance will not include home insurance, which means they will not cover structural damage to the building.
As with homeowners policies, compensation for renters’ personal property is limited to “covered events” or perils listed by the insurance company.
And if you are not married or living with your family, the renter’s insurance policy will only cover the property and liability of the person who pays it. If you have roommates, you will need to get separate policies if everyone wants insurance.