Part of our guide to What Insurance Do You Actually Need? A Plain Guide to Each Type
The difference between these two policies is smaller than most people assume, and the part they share is the part most people undervalue.
Homeowners cover includes the building. Renters cover does not, because the landlord insures that. Both cover your possessions, your liability, and additional living costs if the home becomes uninhabitable. The liability part is the one people underrate.
What they share
Possessions. Your things, usually anywhere, often including items away from home.
Liability. Harm you cause to other people or their property — including, in many policies, incidents away from the home.
Loss of use. If a covered event makes the home uninhabitable, this pays the additional cost of living elsewhere. It is one of the most valuable parts of both policies and one of the least discussed.
What only homeowners cover does
The structure itself, and usually attached fixtures and outbuildings. That is the largest number on the policy and the reason the premium differs so much.
If you own, the building amount should reflect the cost to rebuild, not the market value or the purchase price. Those are different numbers, and land value is not rebuilt.
The part that matters more than contents
Most people size the policy by the value of their belongings. Liability is more likely to be the number that matters.
Contents claims are usually bounded by what you own. Liability claims are bounded by what a court decides. That asymmetry is why liability limits deserve more thought than the contents figure, and why umbrella cover exists.
This one setting changes payouts more than almost anything else. Replacement cost pays what it takes to buy new. Actual cash value deducts depreciation, so a five-year-old sofa pays out as a five-year-old sofa. Check which you have — it is on the declarations page, and it is frequently not what people assume.
Before renewal
Photograph your possessions. A phone walkthrough of each room is the cheapest claim preparation there is.
Check sub-limits on jewellery, electronics and instruments.
Confirm flood is not assumed. It is typically excluded from both and bought separately.
Related reading
- Renters insurance — what it covers
- What umbrella insurance actually covers
- What insurance does not cover
- What insurance do you actually need?
This is general information, not insurance advice — see our disclaimer.
Frequently asked questions
What is the main difference?
Homeowners insurance covers the structure of the building; renters insurance does not, because the landlord insures the building. Both cover your possessions and your liability.
Does my landlord insure my belongings?
No. Landlord cover protects the building and the landlord interest. Your possessions and your liability are your own responsibility.
What is loss of use?
Cover for extra living costs if your home becomes uninhabitable after a covered event. Both policy types commonly include it and both are commonly forgotten.
Is renters insurance worth it?
It is usually among the least expensive cover available, and the liability component alone can matter far more than the value of the belongings.
Sources
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