Homeowners insurance vs. renters insurance

Renters and homeowners insurance offer similar types of coverage, but renters don’t need as much protection as homeowners because they do not own the structure of the home they live in

Renters insurance is financial protection for a tenant who rents their home, whereas homeowners insurance is designed to protect a homeowner who owns their home. Both renters and homeowners insurance are a form of property insurance, and they both cover damage and theft to personal property, as well as liability coverage for legal or medical expenses. 

The main difference between the two is that homeowners insurance includes protection for the structure of the home, as well as other structures on the property, and renters insurance does not. 

When you rent, the structure of your home is your landlord’s problem (and is covered by their landlord insurance policy). Homeowners insurance is more expensive than renters insurance since it contains more coverage components. 

KEY TAKEAWAYS

  • Renters insurance is designed to protect tenants who rent their homes. Homeowners is designed for people who own their homes

  • The main difference between the two policies is that homeowners insurance contains coverage for the structure of the home. Renters don’t need this coverage because they don’t own the home they live in

  • Homeowners insurance costs around $1,200 per year and renters costs about $180 per year

Homeowners insurance vs. renters insurance: What you need to know

Renters insurance covers your personal property if it gets damaged or stolen. It also contains liability coverage and loss of use coverage. A homeowners insurance policy contains those same coverages, but also includes protection for the structure of the home. Renters don’t need coverage for the structure of their home because they do not own it. 

Below is a breakdown of different types of coverage in a homeowners policy vs. a renters insurance policy:

Coverage typeWhat does it cover?Included in homeowners insuranceIncluded in renters insurance
Dwelling coverageCovers the structure of your home and built-in appliancesYesNo
Other structures coverageCovers detached structures of the property, like a shedYesNo
Personal property coverageCovers your personal belongings both on and off your propertyYesYes
Loss of use coveragePays for additional living expenses while your home is being repaired, like a hotel stayYesYes
Personal liability coveragePays for legal or medical bills if you are found liable for property damage or injury to someone elseYesYes
Guest medical payments coverageCovers a guests medical expenses if they get hurt while in your home, no matter who is at faultYesYes*

*If you’re a renter and a guest gets hurt while in your home, depending on the circumstances, the landlord may be liable for their medical expenses.

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Homeowners insurance vs. renters insurance cost

A big difference between homeowners insurance and renters insurance is cost. Homeowners insurance costs around $1,200 a year on average according to the NAIC, whereas renters insurance only costs around $180 a year on average, or $15 a month, according to the NAIC. 

Even though it only costs an average of $15 a month, a standard renters policy typically contains around $30,000 in personal property coverage and $100,000 in liability coverage, making it a great value. 

Homeowners insurance is more expensive than renters insurance because a home policy has dwelling coverage at its core. It’s a good idea for homeowners to have enough dwelling coverage to cover the rebuild of their home. That means if you live in a house that has a replacement cost (not market value) of $300,000, you should have $300,000 worth of dwelling coverage. 

What determines the price of homeowners and renters insurance?

Coverage components aren’t the only factors that affect the price of your homeowners or renters insurance policy. Location — including crime rates and proximity to natural disaster risk zones — is an important factor for determining rates of both types of insurance, and prices can vary widely by state, region, city, and even block by block. 

Below are other factors insurance companies take into consideration when determining the price of your renters or homeowners premiums. 

  • Credit score

  • Claims history

  • deductible amount 

  • Value of personal property

  • Discounts

Below are factors that insurance companies take into account for homeowners insurance only:

  • Age of your home (older homes can be more expensive to rebuild, and have higher rates)

  • Your home’s building materials

  • Size of your home

  • What type of roof your home has

  • Attractive nuisances on the property, like a pool or a trampoline

  • The history of claims made on the property from past owners

What do homeowners insurance and renters insurance cover?

Both homeowners insurance and renters insurance protect your personal property if it's damaged or destroyed by one of the named perils in your policy. Homeowners insurance also protects the structure of your home and the other structures on your property from the same perils. 

Covered perils can vary by policy, but the most common ones are:

  • Fire and lightning

  • Theft

  • Windstorm and hail

  • Explosions

  • Riots

  • Damage by aircraft

  • Damage by vehicle (not your own)

  • Smoke damage

  • Vandalism

  • Theft

  • Volcanic eruption

  • Falling objects

  • Weight of snow, ice, sleet

  • Damage from steam-heating/water-heating appliances/systems

  • Leakage or overflow of water or steam

  • Freezing of plumbing, heating, air conditioning

  • Short-circuit damage caused by electrical appliances

Both home and renters insurance protect your property if it’s stolen, either from your home or off your property. For example, if someone breaks into your car and steals your laptop, your renters insurance or homeowners insurance policy would come into play for the stolen laptop (the broken windows would still fall to your car insurance company, though).

What do homeowners insurance and renters insurance not cover?

Renters insurance never covers damage to the structure of a home, but homeowners insurance does. Both renters and homeowners insurance policies contain excluded perils, meaning specific types of damage both policies will never cover. Renters insurance will never cover these perils if they damage your personal property and homeowners insurance will never cover them if they damage your personal property or the structure of the home.

  • Flood

  • Earthquakes

  • Wear and tear

  • Negligence

  • Maintenance issues

  • Mold or fungus growth

  • Pest infestations

This means if you have renters insurance and your personal property is damaged in a flood, your renters policy wouldn’t pay to repair it. It also wouldn’t cover the cost of additional living expenses if you’re booted out of your apartment while it's being repaired. 

And the same goes for homeowners insurance. If you’re a homeowner and your basement is damaged by a flood, along with your furniture and TVs, your home insurance wouldn’t cover you either, and it wouldn’t pay for you to live elsewhere while your home is repaired. 

If you live in an area of the country that’s high-risk for flooding or earthquakes, you can typically add coverage to a renters or homeowners policy for protection from those natural disasters, or you can buy standalone earthquake insurance or a flood insurance policy. 

How to lower your renters insurance or homeowners insurance premiums

Insurance companies offer discounts for both renters and homeowners insurance. You may get a discount if you have a claims-free history, or if you have a good credit score.

Some other common home and renters insurance discounts include:

  • Safety discounts, like if you install a burglar alarm or deadbolt lock

  • Bundling discounts, like if you bundle your renters or home policy with your auto policy

  • Loyalty discounts

  • Paid-in-full discounts

Another way to lower your premiums is to raise your deductible, the higher your deductible the cheaper your premiums will be. However, you don’t want to raise your deductible to the point that it’s unaffordable, since you may have to pay it one day. Deductibles for both renters and home insurance are typically set at either $500 or $1,000. 

Reshopping your insurance every year is a good way to save on your premiums, too. It’s a good idea to shop around annually because another insurer may offer you the same coverage at lower rates. You can re-shop your home insurance and compare companies with one of our Policygenius experts.

Insurance Expert

Logan Sachon

Insurance Expert

Logan Sachon is the co-founder of The Billfold, a groundbreaking personal finance site for millennials that was named one of Time's 25 Best Blogs of 2012. Her work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed and more.

Property and Casualty Insurance Expert

Kara McGinley

Property and Casualty Insurance Expert

Kara McGinley is an insurance editor at Policygenius, specializing in home, auto and renters insurance. She previously worked as a freelance writer and copywriter, and has been writing about insurance since 2019. Kara is an expert at making complicated topics like property insurance simple to understand. Her work can be found in Teen Vogue, The Culture Crush, and more.

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