Homeowners Insurance vs. Renters Insurance: What’s the Difference?

Discover the differences between homeowners and renters policies.
Gorgeous New England style modern farmhouse with separate living space. Homeowners vs. Renters Insurance.

Both homeowners insurance and renters insurance can provide financial protection against the loss of property or liability expenses. But when it comes to the differences between homeowners insurance vs. renters insurance, there’s a lot you need to know.

For starters, homeowners have total ownership of their homes, but renters, even though they live in a particular dwelling, have zero ownership in the properties they rent. However, the biggest insurance difference between homeowners vs. renters is that home insurance policies cover homeowners' belongings as well as the dwelling itself, whereas renters' insurance policies cover only renters’ personal property.

What’s the Difference between Homeowners and Renters Insurance?

When you are a renter and not a property owner, renters insurance can provide coverage if your personal possessions are damaged or stolen, and can also cover legal costs if you unintentionally damage property. A renters insurance policy can cover medical costs if a guest is injured while visiting you and may provide living expenses if the place you rent is uninhabitable due to a covered event, such as a fire, while repairs are made.

The difference between homeowners insurance and renters insurance is that homeowners insurance covers all of the same things a renters’ policy covers, but also covers the property itself, as well as any structures on the property like sheds, barns, or detached garages.

Both homeowners insurance and renters insurance require regular payments, usually either monthly or as one lump-sum annual payment. Deductibles (the amount of money you are responsible to pay before your policy will pay for a covered loss) apply to both types of insurance coverage. Policies must be in good standing for your provider to pay out a claim.

Renters Insurance Homeowners Insurance
Who is it for? Renters Homeowners
What does it cover? Personal property, liability, medical payments, and loss of use Your home (and other structures), personal property, liability, medical payments, and loss of use
What does it cost? $174 per year, on average $1,272 per year, on average
Can you get a discount? Yes Yes
Is it required? Your landlord may require it, but it’s always a good idea to have Yes, if you have a mortgage on your home
How do you pay for it? Premiums can be paid monthly, quarterly, or annually Premiums can be paid monthly, quarterly, or annually
Do you have to pay a deductible? Yes Yes

How Does Coverage Differ between Homeowners and Renters Insurance?

Both homeowners and renters insurance policies provide financial safeguards against property damage for policyholders. These protections include coverage for property damage, costs related to legal liability, medical payments (if someone is injured on the property), and costs related to living out of the home if it’s uninhabitable (this is called “loss of use”).

The key differentiators between homeowners vs. renters insurance lie in the types of property damage that are covered.

Type of Coverage Renters Insurance Homeowners Insurance
Home/other structures None Coverage helps pay to rebuild your home after a covered loss
Personal property Your coverage will help pay to repair or replace your personal possessions after a covered loss Your coverage will help pay to repair or replace your personal possessions after a covered loss
Personal liability Yes Yes
Living expenses associated with loss of use Yes Yes
Medical payments Yes Yes

Learn more about home coverage types and renters coverage types.

Homeowners vs. Renters Insurance - When Is It Required?

Though neither homeowners nor renters insurance is required by law, you might still be required to have one or the other. For example, if you have a mortgage on your home, most lenders require you to have a homeowners insurance policy on your home. Until you pay off your home loan in full, your lender wants their investment protected.

With renters insurance, even though it’s not a legal requirement, your landlord might require you to have it (and even if they don’t, it’s probably a good idea to have it anyway).

Renters Insurance Homeowners Insurance
If you’re renting your home, whether it’s an apartment or a house, it’s important to have an insurance policy to cover your personal belongings. Many renters assume that their landlord’s homeowners insurance policy will cover them, too. This is not the case. But your personal property isn’t the only concern.

Renters insurance also covers you if someone—a friend, your neighbor, or even your Uber Eats driver—is injured on your property and decides to sue you.
Homeowners insurance is important because it protects your home and personal property. If your home is lost due to a fire or a natural disaster, such as a hurricane, earthquake, or tornado, your homeowners insurance can provide the funds to help you rebuild.

Also, it provides liability coverage to help cover the costs of lawsuits or medical payments if someone is injured at your home.

Cost of Homeowners vs. Renters Insurance

Homeowners insurance is more costly than renters insurance because it covers more. A homeowners insurance policy doesn’t just cover personal property, it also covers the dwelling itself, which is of much higher value than personal possessions alone. Homeowners have many more risk factors than renters, and the cost of rebuilding a house is significantly more expensive than replacing personal effects.

The average cost of building a home in the US can range between $163,000 and $484,000. While this is a wide span, it gives you an idea of why homeowners insurance costs more than renters insurance.

Homeowners insurance covers homeowners in case they must rebuild. The cost of homeowners insurance takes these costs into account, as well as the location of your property, your home’s market value, and the cost of replacement. You can use our Homeowners Insurance Cost Calculator to easily estimate the cost of your homeowners insurance coverage.

Renters Insurance Homeowners Insurance
On average, a renters insurance policy costs around $15 per month, or $174 per year, though this can vary by where you live. The U.S. national average cost of homeowners insurance is $1,272 per year. However, costs can vary, depending on the value of your home, where you live, coverage selections, and your risk of being affected by a natural disaster, such as a hurricane or a tornado.

What Factors Determine the Price of Homeowners and Renters Insurance?

When it comes to determining the cost of renters or homeowners insurance policies, insurance providers look at several factors. Many of these, not unlike your auto insurance policy, are related to the company’s risk of covering you.

For example, the amount of coverage you want and the deductible you choose will influence your cost of coverage. Your location and whether you live in an area prone to natural disasters or higher crime rates all affect the cost of your homeowners or renters insurance premiums. But there are lots of other factors, too, that insurance companies consider.

Of course, the cost of replacing your home or possessions is the biggest line item insurance providers look at when determining the price of your coverage. However, other factors — like small claims you’ve made in the past, your credit score, any pets that live with you, or if you have a trampoline or a pool — can drive up the cost of your monthly premiums, too.

Discounts for paying your premium in full each year, bundling your auto and renters or homeowners insurance with the same provider, or opting to receive and pay your invoices online can all help to lower your cost.

Why Is Homeowners Insurance More Expensive Than Renters Insurance?

Homeowners insurance costs more than renters insurance because these policies cover more. There are many factors — fire, storm damage, and other natural disasters — that help insurers determine their level of risk if they cover your home. If your home is destroyed and you need to rebuild, your coverage can help pay those costs and the costs to replace your personal property.

When an insurance provider is determining its policy premiums, their calculations are based on how much they expect to pay in claims to their customers. Insurance companies expect to pay much costlier claims for homeowners than tenants, which is why homeowners insurance costs more than renters insurance.


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Are Discounts Available for Homeowners and Renters Insurance?

Whether you own your home or are renting, it’s smart to be savings savvy. When it comes to insurance, home insurance discounts and renters insurance discounts can help lower your premium. Simple things like having multiple policies (think of bundling your auto insurance and homeowners or renters coverage with one company), signing up for automatic payments, or even being a member of certain professional organizations can mean discounts on your policy premiums.

Whether you’re shopping for homeowners or renters insurance coverage, it’s important to know that there are several discounts available to consumers.

  • You can get a safety discount. Installing a security system, deadbolt locks, carbon monoxide or smoke detectors, or sprinklers will protect your home and can lower your insurance premiums.
  • Is your home new or newly renovated? You could be eligible for discounts because your newer systems are less likely to fail.
  • Do you live in an area that’s prone to severe weather? You could get a discount for disaster preparedness like installing storm shutters or shatterproof glass.
  • Is your home close to a fire hydrant or your local fire department? Your insurer could give you a discount.
  • How old is your roof? Replacing a roof is expensive. If your roof is newer, your insurance provider could offer you a discount.
  • Keep an eye on your credit score. Your good credit score could help keep your policy premiums lower.

What Kinds of Damage Are Covered with Homeowners vs. Renters Insurance?

Both homeowners and renters insurance policies are designed to cover certain kinds of damage. Both homeowners insurance and renters insurance cover your personal property if it’s stolen — even outside your home — or damaged. Homeowners insurance can help cover costs to repair or replace your home when it is damaged due to a covered event. But there are a number of things that may or may not be covered, based on exclusions in your policy.

Is loss or damage from these perils typically covered? Renters Insurance Homeowners Insurance
Fire and lightning Yes Yes
Wind and hail Yes Yes
Explosions Yes Yes
Riots Yes Yes
Damage by aircraft Yes Yes
Damage by a vehicle (not yours) Yes Yes
Smoke damage Yes Yes
Vandalism Yes Yes
Theft Yes Yes
Falling objects Yes Yes
Weight of snow, ice, and sleet Yes Yes
Pools and trampolines Varies by insurer Varies by insurer
Damage from steam Yes Yes
Water leaks or overflows Yes Yes
Freezing of plumbing, heating, or air conditioning Yes Yes
Electrical damage caused by appliances Yes Yes
Flooding No Not if damage results from natural causes
Earthquakes, landslides, sinkholes, etc. No No
Pest infestations No Generally not, but there are exceptions
Mold No Depends on the root cause
Dangerous pets No Sometimes
Damage to your car No No
Your roommate’s property No N/A

Understand what’s covered under renters insurance claims and homeowners insurance claims.

Finding Homeowners and Renters Insurance Quotes

Finding the right homeowners or renters insurance policy is a big deal. Talking to an independent insurance agent can help you better understand coverage options and discounts and offer you greater peace of mind.

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TrustedChoice.com Article | Reviewed by Jeffrey Green

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