Different Types of Home Insurance

By Danielle R.

Published on December 4th, 2020

Home insurance is an umbrella term that describes an insurance policy that covers your dwelling. Dwelling is just another word for where you live or a building you own and can be a single-family home, apartment, or other structure. All of these policies (except renters) have similar functionality and cover at least these three main parts: dwelling, personal property, and personal liability.

Some terms you should know:

Dwelling refers to the walls and structures of the house. It is important to remember that homeowners insurance does not cover land.

Personal property is anything inside from furniture to socks to toothbrushes. Anything that you own inside the house is covered up to your limit under your home policy.

Personal liability is slightly more complicated. It covers you up to limit if someone sued you for accidental injury or property damage while on your property.

Homeowners Insurance

Homeowners insurance refers explicitly to a traditional single-family home or vacation home. You may own this type of home outright or have a mortgage, but either way, you need insurance to cover this big investment: it financially protects you if something happens to your home. The homeowner policy itself at its most basic level covers the dwelling, personal property, and your personal liability mentioned above.

In addition, homeowners insurance usually include coverage for additional living expenses if your home becomes unfit for living: this include the costs of temporary rental or eating out. It can also cover small medical payments if someone gets injured while on your property.

It is crucial that you insure your home for the correct amount, known as the estimated replacement cost, or the cost to completely rebuild your home. Neglecting to cover the full estimated replacement cost could involve serious financial repercussions in a loss. 

Condo insurance

Condo owner’s insurance is similar to homeowners insurance in its coverages. Condos need both personal property and liability coverage appropriate to the dwelling’s value or the estimated replacement cost of rebuilding your specific unit per your liability.

However, it generally requires less coverage on the building than a homeowner policy. This is because a condo association typically covers high-cost items like the roof. This means your insurance does not need as high of a limit and is thus cheaper than a homeowner policy but still protects you in the same way.

Rental property insurance

Rental property insurance is like homeowners and condo insurance, except it has much lower personal property limits. This is because it is assumed that a renter living inside your property will have their own renter’s insurance policy covering their belongings. You do not need high coverage levels for content, but it is essential you have the right amount of liability. The pricing is very similar to a condo policy.

Renters insurance

Renters insurance is for when you have personal property and liability but are not liable for the building. This could mean you are renting an apartment, home, or condo. It does not matter what type of home you rent as long as you have no legal liability tied to the building. Renters policies are the cheapest type of home coverage because of low personal property and liability.

For the best information on how much home insurance coverage you need regarding home liability and property, talk to your agent. You can cheaply and easily bundle home insurance with your auto policy for maximum protection and savings.