Homeowners and renters insurance, have many similarities, but they also have some differences. If you own a home, chances are that your lender is actually going to require that you have some homeowners insurance in place. And honestly many landlords these days, also require renters to carry some form of renters insurance. Beyond that, both types of policies provide a level of financial protection against damage to your property, some legal liabilities. And potentially medical payments and the cost of living elsewhere if something did happen to where you're currently living. The major difference between these two types of insurance policies, is the underlying property. Homeowners insurance is for individuals who actually own the property. And renters insurance is for individuals who rent the property. Both of these types of policies, are going to cover a similar aspect. But there's one key exception. Homeowner's policy would cover the dwelling itself, aka the physical structure, whereas a renters insurance policy would not. On top of that, both these policies can cover personal property, personal liability, additional living expenses and medical payments. Most common types of homeowners and renters insurance, cover perils such as fire smoke, wind, hail, lightning explosion, vehicle theft, vandalism, trees or water damage that's caused by plumbing or appliances. The exact details of what perils is covered and is not covered is really going to depend on your specific policy that you have in place. Just like their common perils that are typically covered by policies. They're also going to be common perils that are not covered by policies, such as government seizure, floods, earthquakes, power failure, neglect and even more. These common perils that are not covered, might actually be able to be covered through purchasing additional coverage. So it's going to be really important for you to assess your overall risk, and then adjust your total coverage appropriately. Common examples would be people who live in an area that would be prone to flooding. Or individuals who may be live in the state of California that may be exposed to earthquakes, should explore additional types of coverage. Now that you understand what perils may or may not be covered. Let's dive into what types of things insurance would actually pay for. First, we personal property coverage. These policies will cover the damage or theft of personal property, such as your close. your furniture, electronics, etc. Typically the amount of the coverage is going to be a set percentage of your dwelling coverage. Or it could be a specific dollar amount that would be specified, when you purchase the actual policy. When it comes to your personal property. It's also going to be important to keep in mind, that there are going to be limits and exceptions that may apply to high value personal items, such as jewelry or even collectible such as art or baseball cards. It's also extremely important to understand your policy limits, and potentially obtain extra coverage. If you do have these types of high value personal items or collectibles inside of your home. Next step will be personal liability coverage. These policies cover liability from legal exposure resulting from the injury or damage that was caused to others. Typically, your policy would include a default amount. And it's important to review that default amount and make sure that it doesn't leave you exposed to any sort of potential legal consequences, depending on your other assets and your overall net worth. Next up will be medical payments coverage. These policies also cover medical payments for you and for others. Which is distinct from that liability coverage we talked about earlier. There'll be a specific amount of medical coverage in your policy, and an average amount maybe around, let's say $2000. Neither homeowners or renters insurance comes free of charge. And it's going to be really important for you to explore your options, to make sure that you're protecting the risk that you face, in a cost effective manner. The average annual homeowners insurance policy, cost just over $1000 a year. And the average annual cost of a renter's insurance policy, is just under $200 a year. Homeowners insurance is going to be more expensive, because quite frankly it covers more. Even though those are going to be the average amounts that people spend on this type of insurance, the cost can vary widely. You should consider shopping around, to make sure that you're going to get the best deal possible. Maybe you can consider an online insurance provider or even bundling this insurance with other types of coverage that you have in place. To make sure that you're saving as much money as possible.
