What Is the Difference Between Homeowners and Renters Insurance?

Whether you own a property or have rented one, the property and all personal belongings should be protected with a valid insurance policy. Canadian homeowners rely on homeowners insurance to cover the dwelling and the contents of the property. However, if you rent an apartment, you must insure your personal belongings, as the landlord’s insurance will not pay for them.

However, before getting home insurance for the property, you must learn about the differences between homeowners’ and renters’ insurance policies. If you are looking for competitive home insurance policies at reasonable rates, then you must contact Surex. 

Homeowners Insurance

Homeowners Insurance has been exclusively designed for all those property owners who own a house, condo, or apartment. It essentially protects the structure along with your belongings.

To determine the amount of coverage you require, you must first estimate the value of your property and your personal belongings. The insurance company will then determine the value by calculating the cost of replacement or the cost of rebuilding and replacing everything.

Renters Insurance

Much like coverage for homeowners, renters insurance policies should be purchased by all tenants who stay in rented accommodation. A homeowner’s or the landowner’s policy will not cover the renter’s personal belongings. For example, if there is a fire on your rented property. In such a case, the homeowner’s policy would cover the loss to the structure. However, you would be left high and dry with no compensation for your lost belongings. Thus, this makes it important to have renters insurance.

Homeowners insurance vs. renters insurance

The main difference between renters insurance vs. homeowners insurance is the type of coverage that they offer.

What does homeowners insurance cover?

Dwelling coverage

This is the main difference between a homeowners insurance policy and renters insurance. Only the homeowner’s insurance will offer dwelling coverage which will protect or pay for any damages to the property’s structure. Damages may include anything ranging from a broken door, cracked window, and tiles to the total destruction of the building. This type of coverage also protects other structures on the property, like a garden, shed, garage, or storehouse.

But you must remember that most insurance companies in Canada will not accept all types of damages. They have a “named peril” policy that enlists all the covered events for which the insurance company will pay. Some covered events include smoke, fire, water damage, and damage due to weather like heavy wind or hail storms.

Medical payment

The policy will also pay for the medical bills of a third party who is injured on your property and requires medical attention. This coverage is offered on a no-fault basis so that you won’t face any legal charges.

Personal property

This coverage protects all your personal belongings and other stuff inside your property. In some instances, even if a valuable item is not present in your home, you can get coverage. For example, if your mobile phone or laptop is stolen from your car, the policy will be applicable, and you will get a reimbursement.

You have the option of choosing a sub-limit of personal property coverage in your homeowner’s policy.

Personal liability coverage

If someone is injured in your home or another person sues you for any damage to their property, or themselves, personal liability coverage becomes active. The amount is flexible.

Additional living expenses

If due in any instance, you need to stay away or vacate your property due to a covered peril, then all your living expenses, like hotel charges or rental property charges, will be paid by the company.

What does renters insurance cover?

Personal belongings

This is why most tenants have a homeowners renters insurance policy in Canada. This insurance policy protects the tenants’ personal belongings, like clothes, furniture, valuable equipment, and other essential items. Thus, it is important to make an inventory of all your valuable possessions, determine your overall cost, and inform the insurance company.

Additionally, while getting the insurance, you will be given the option to choose from cash value coverage and replacement cost coverage. If you select replacement cost coverage, you will get a larger payout if your prized possession is destroyed or damaged in a covered peril. This is because a replacement policy pays for buying the destroyed asset as per current market rates. 

However, actual cash value insurance compensates for the lost asset after factoring in depreciation. Naturally, replacement policies are more expensive.

Like dwelling coverage, objects stolen from your vehicle will be covered even if your car is not on the property at the time of the incident.

Personal liability

This coverage becomes applicable if someone is accidentally injured on your property. It will also protect you and pay for all the expenses if the landlord files a lawsuit against you in case you cause any damage to the rental property.

The approximate cost breakdown

Naturally, homeowners insurance will cost more as it secures the structure of your home. In most cases, they have a higher average replacement cost. However, it will depend on your area of residence, the liability risk, and the replacement cost of your home.

According to the NAIC (National Association of Insurance Commissioners), the approximate premium for a homeowners insurance policy was $1,192 in 2016. All Canadian residents who own a property pay between $400 and $3000 per year.

On the other hand, renters insurance only cost an average of $185 per year in 2016. Nowadays, the renters insurance premium is only about $30 a month for most tenants.

Homeowners renters insurance — Endnote

It is always a good idea to get insurance for your home. Even if you live on a rental property, it won’t harm to get renters insurance as your personal belongings will be safe. Remember, homeowners’ insurance only covers damage to the actual structure you are living in. Any damage to your personal belongings will not be covered. This makes it important to have renter’s insurance. 

Reach out to professionals who can help you choose the best policy according to your needs – be it a homeowners’ policy or renters’ policy.

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