Homeowners insurance vs. renters insurance

Understanding the differences between these two insurance types.

Logan Sachon

Logan Sachon

Published May 9, 2019

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A renter rents her home; a homeowner owns her home. Renters insurance protects the renter, homeowners insurance protects the homeowner. It might seem that they’d offer pretty similar coverage, and they do, except for one big difference: when you own a home, you own the structure and the contents, and so you need a policy to cover both. Homeowners insurance does that. When you rent, the structure is your landlord’s problem (and is thus covered by her insurance policy). The contents of your home are yours, and that’s what your renters insurance coverage.

Read more about the differences between homeowners and renters insurance:

What renters insurance covers vs. what homeowners insurance covers

Renters insurance provides three types of coverage for people who rent their homes: personal property coverage, personal liability coverage and medical bill coverage, and additional living expenses.

Homeowners insurance consists of four types of coverage: personal property coverage, personal liability coverage and medical bill coverage, additional living expenses, and coverage for the structure.

Coverage provided by both renters insurance and homeowners insurance:

Personal property coverage kicks in if your personal property damaged or destroyed by one of the named perils in your policy. Named perils can vary by policy, but the most common ones are:

  • Fire and lightning
  • 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

This coverage also protects your property if it’s stolen, either if it’s in your home or not. 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).

Personal liability coverage protects you if someone sues you for damages to their property or themselves in any unintentional, non-car related incident inside or outside your home (if you injure someone with your car, that also falls under your car insurance). Renters insurance policies and homeowners insurance also include some coverage for medical bills in the same situations, so your policy can pay to treat people’s injuries without them having to sue you.

Finally, renters insurance and homeowners insurance both provide temporary living expenses, known as additional living expenses or loss-of-use coverage, in case you need to vacate your home after a covered peril for repairs. This coverage pays for a hotel or temporary rental, plus food and other expenses.

Coverage provided by only homeowners insurance:

Coverage for your home’s structure pays to repair or rebuild your home if it is damaged or destroyed by one of the covered perils on your policy. Other structures on your property are covered, too — like a garage or shed. For renters insurance, this coverage isn’t included because you don’t own the building; any damage to to the structure will be covered by your landlord’s insurance.


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Renters insurance vs. homeowners insurance exclusions

Another thing that both renters insurance and homeowners insurance have in common: excluded perils. Neither renters insurance or homeowners insurance provide coverage for floods (you need flood insurance for that) or for earthquakes (you need earthquake insurance for that).

Read more about flood insurance for renters and earthquake insurance for renters.

And as far as liability coverage: neither insurance type will cover you for any injuries or damage you cause while in a motor vehicle — that’s what auto insurance is for.

Renters insurance vs. homeowners insurance cost

Besides structural coverage, the biggest difference between renters insurance and homeowners insurance may be the cost.

The average cost of renters insurance in the U.S. is just $188 per year, or just under $16 per month, according to the National Association of Insurance Commissioners (NAIC). (Policygenius can help you get free renters insurance quotes.

Homeowners insurance, on the other hand, can be much more expensive. NAIC reports that the average homeowners insurance cost in the U.S. is $1,173 per year, or $98 per month.

Factors that influence homeowners insurance and renters insurance costs

Costs of both are determined by how much coverage you purchase and how much your deductible is. Some types of pets can up your rates for both types of insurance. But location — including crime rates and proximity natural disaster zones — is a super important factor for determining rates of both types of insurance, and prices can vary widely by state, region, city, and even block by block.

Read more about how much renters insurance costs by state.

Factors that further influence homeowners insurance costs

Because homeowners insurance also covers the structure, a lot of structural details go into determining your premium quote. Examples of factors that can affect your homeowners insurance premium:

  • Proximity to fire hydrant or the fire station (the closer, the better)
  • The materials your home is made of (wooden frame homes are more susceptible to fire damage so may have higher rates)
  • Age of your home (older homes can be more expensive to rebuild, and have higher rates)
  • Condition of your home (run-down homes have higher instances of filing claims, so they have higher rates)
  • Size of your home (larger houses are more expensive to replace, plus tend to be targets for burglaries, so have higher rates)
  • Your own claim history (if you’ve filed several claims in the past or had a major claim in the past few years, your rates could be higher)
  • The history of claims made on the property from past owners (if the home has a history of weather damage claims, for example, your rates could be higher)

Buying renters insurance vs. homeowners insurance

Renters and homeowners insurance are also similar in that they’re both fairly easy to buy.

How to buy renters insurance

To buy renters insurance, all you need is your address and an estimate of how much all your stuff is worth, which you can figure out by doing a home inventory. And you don’t even need that: if you get a renters insurance quote from Policygenius, you can use our personal property calculator to quickly and easily estimate the amount of coverage you need.

How to buy homeowners insurance

Homeowners insurance is a little bit more complicated to buy, because it involves figuring out the replacement value for your home in addition to the value of everything in it. (Remember: the replacement value or dwelling value is not the market value of the house or even what you paid for it; it’s what it will cost to rebuild it in case of a total loss.)

But luckily the insurance company (or broker) does the heavy lifting on determining the replacement value of your home, and you can still buy homeowners insurance quickly and easily. (You can get started by getting a free homeowners insurance quote from Policygenius.)

When you talk to a licensed insurance broker or a representative from an insurance company to get your homeowners insurance quotes, you’ll need to share information about your home, most of which you will have from the appraisal you had done when you bought it

Questions may include:

  • What year was the house built?
  • What type of heating does it have?
  • Is there a basement? What percentage of it is finished?
  • Is there a pool?
  • What material is the siding?
  • What material is the roof?
  • What is the age of the roof?
  • What is the age of the heating?
  • What is the age of the plumbing?
  • What is the age of the wiring?
  • What are the size of the porches, decks, and patios?
  • What is the foundation type? (slab, basement, pilings, no foundation)

The insurance company will come up with a replacement value of your home, and then base the coverage amounts for the other types of coverage on that amount.

Common homeowners coverage amounts:

  • Personal property coverage is 50% to 70% of replacement value
  • Other structural coverage (like fences, detached garages) are 10% of replacement value
  • Loss of use is 50% of the replacement value
  • Liability coverage is not tied to replacement value

You can raise and lower these amounts based on your own situation.

The final step is that after you purchase your homeowners insurance policy, the insurance company will send an inspector out to confirm that the replacement cost that they estimated is correct. If there is any major damage that you failed to report, you may be required to fix it within a certain amount of time. Otherwise, you’re good to go.


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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.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.