Renters Insurance Vs. Homeowners Insurance Explained
Renters insurance is designed to cover the contents and personal effects of the person who rents a dwelling. When you rent, you’re not responsible to insure the building, of course. That’s the landlord’s problem. You are responsible for insuring your contents and the things you own.
You also need renters insurance to make sure you can pay for the building if you are responsible for a fire or other loss.
Wait, but didn’t we just say that insuring the building was the owner’s problem?
It is. But the landlord’s insurance won’t just pay out that fire claim and call it a day. They’ll want to know who caused the fire and how. If the answer is “you” and “negligence,” they’ll expect for you to pay them back for what they paid on the claim. The landlord assigns his right of recovery to the insurance company when he files a claim, and they will use that right of recovery in a process called subrogation.
Subrogation is, in a nutshell, a fancy word for “suing the person who caused the loss to get back what was paid on the claim because they’re responsible.”
Renters insurance liability protects you from that suit, pays that claim, and makes sure that everyone involved in the loss is made whole. It also makes sure that you have a defense against that claim so that you (and your policy) don’t just get railroaded.
Homeowners insurance, on the other hand, covers the structure itself and is more expensive. Many of the other types of coverage are very similar, however, including liability. Liability protects you against the claims of anyone you cause bodily injury or property damage to, which is why both renters and homeowners insurance has the coverage.
Rent To Own Home Insurance
If you need rent to own home insurance, how are you covering the property? Do you need renters insurance or homeowners insurance for a rent to own home? How can you tell which one you need?
Generally, these rent to own home insurance requirements are part of the contract, and it depends how the deal is structured. The most common way for these transactions to work is that you’re a tenant for a period of several years, at which point you have an option to buy the home. As a tenant, you need renters insurance. As soon as you purchase the home, however, you’re required to have homeowners insurance.
The right policy depends on where you are in the transaction and how everything is arranged, so you’ll want to have a copy of the contract handy and reach out to an insurance expert for renters at Effective Coverage. They can help you determine whether you need renters insurance to cover your rent to own home insurance needs, or if homeowners insurance is more appropriate, and get you the right policy quickly and efficiently.
Insuring A Home On A Land Contract – Renters Insurance Vs. Homeowners Insurance
How do you insure a home on a land contract – do you need renters insurance or homeowners insurance? Contract for deed insurance can be complicated, but it doesn’t have to be. In many states, these are done on standard real estate forms. That means it’s pretty straightforward. Generally this works somewhat like the rent to own home contracts do, insofar as the deed remains with the seller until the contract is paid. In that case, you need Nevada Renters Insurance.
On the other hand, sometimes these are structured as seller-finance or seller-carried mortgages. We’re not talking about the seller carrying back a second mortgage, of course. There you definitely need homeowners insurance because there’s a bank involved who’s giving you the first mortgage, so you own it.
If the seller is carrying the mortgage, and the deed has passed to you, you are responsible for insuring the home. The seller wants to know that their collateral is protected, since they’re trusting you to make the payments for years or decades based on that collateral in the form of the home.
If you don’t own it yet, if the deed is still the seller’s, you’ll generally want renters insurance. If you own it, if the deed has passed to you, you’ll want homeowners insurance. There are, of course, as many ways to structure a real estate transaction as there are pieces of real estate, so you’ll want the specifics of your deal available when you call an insurance expert at Effective Coverage to determine how to insure a home on a land contract or contract for deed.
Where Can I Get Answers About Renters Insurance Vs. Homeowners Insurance And Which One Is Right For Me?
The insurance experts at Effective Coverage can help you to determine what kind of insurance policy you need for a non-standard real estate transaction. The way ownership transfers in your particular situation is what will be the primary determinant.
Don’t forget that you can also do a contract for deed on a condo or another type of home where an association takes part of the insurance responsibility. These are common in Nevada, and give you another reason to make sure you’re working with an expert because that could potentially be another type of policy altogether.
If you need to insure a rent to own home, or if you need insurance for a contract for deed or land contract, or even if you need seller finance insurance, Effective Coverage has the insurance expertise to help you get the coverage you need at a price you can afford. It’s easy, affordable, and fast.
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