Hello World! Welcome Friends! On the surface, the difference between renters insurance and homeowners insurance seems obvious: You get the first kind of insurance when you’re paying rent every month, while you get the second kind of insurance when you’re paying down your mortgage every month. Both kinds of insurance require the policyholder to make regular payments, and they both also require that a deductible be paid after you file a claim. There are some key differences worth discussing beyond that, however. Here are three differences that you need to know about.
The Cost
Renters insurance is not going to break the budget by any stretch of the imagination. According to one estimate, renters insurance cost an average of $20 per month. In many cases, it’s going to be even less than that. Let’s use New Jersey as an example.
To get homeowners insurance in New Jersey, you’ll need to fork out an average of $1,318 a year in premiums. If that seems high, then it’s not when you compare it to other states. New Jersey is actually quite affordable, but it’s still going to cost you over $100 a month, compared to about $20 a month for renters insurance.
Belongings vs Buildings
There are good reasons for the price difference between renters insurance and homeowners insurance. Generally speaking, renters insurance only covers the stuff inside the structure. It won’t cover the actual physical building. That means if there’s a house fire inside your apartment, renters insurance will probably pay to replace things like your furniture and electronics. But it’s not going to pay for structural damage to the home, because you don’t own that part.
Another point worth paying attention to when you buy a policy is how, exactly, the policy will cover belongings that have been lost. If you lose an iPhone in a fire, is your insurance going to pay for you to buy a brand new iPhone, or it will it only pay for what the iPhone was worth at the time of the fire? Do your homework to make sure you know exactly what to expect if you have to file a claim for lost or stolen property.
The Requirement to Have It
If you own a home, you’re going to need homeowners insurance. That’s not because it’s illegal not to have it; the police really don’t care if you do or don’t carry coverage. Dispatchers won’t ask if you have insurance before they send officers to respond to a burglary. However, the lender financing your mortgage definitely does care, which is why they’ll make it a requirement of your mortgage. No homeowners insurance means no loan, which means you’re going to have to obtain a policy unless you can pay for a house in cash.
That helps explain why 95 percent of homeowners carry homeowners insurance, according to a study from the Insurance Information Institute. But as of 2014, only 37 percent of renters carry it, likely because their landlords don’t require them to do it. That’s a big mistake on both sides. If you’re a landlord, requiring renters insurance makes your life much easier. Not requiring it as a condition of the lease makes your life more complicated for no real reason. It’s like refusing to use landlord software and instead keeping track of your properties via an old-fashioned filing cabinet. It’s 2018, so it’s time to get with the modern era. If you don’t make your renters get it, then there’s a chance they might try to come after you when there’s a natural disaster or other emergency. That doesn’t mean they’ll succeed, but why even chance it when renters insurance is both inexpensive and easy to find?
Click the links below for any posts you may have missed!
6 Renter Friendly Ways to Decorate your Apartment
Relax and Let Someone Else do the Decorating
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