When searching for insurance for your home, you may encounter the terms homeowners insurance and property insurance frequently. While often used interchangeably, there are key differences homeowners should know.
Here is a basic guide to understanding both types of insurance and when to use them:
Property insurance vs homeowners insurance
Property insurance is a blanket term. While every home is a type of property, not all property is a home. Property insurance also applies to properties you own but do not use as your primary residence.
Both homeowners and renters insurance are a type of property insurance that covers liability. This protects from claims against you due to injuries or damages to others on your property.
Property insurance picks up where homeowners insurance leaves off
Homeowners insurance covers a number of damages caused by natural perils. This often includes, but is not limited to, high winds, hail and lightning. Some natural causes of damages are not covered under standard homeowners insurance policies, such as floods or earthquakes.
If you live in an area experiencing frequent flooding or earthquakes, you may have to add on an additional property insurance policy, such as flood insurance or earthquake insurance.
Helpful terminology for homeowners
- Property insurance: Financial protection and reimbursement in the case of damage to your belongings.
- Homeowners insurance: In the event of theft, wind, fire and other perils, your home is financially covered in the case of damages.
- Flood insurance: Property insurance specifically covering damages caused by water to the structure of a property.
- Premiums: Price paid for an insurance policy.
- Your deductible: The amount covered by the policy owner for damages before the insurance financially kicks in.
Having the right mix of homeowners insurance and property insurance gives you broad coverage for your living space. If you’re unsure what type of insurance is best for your situation, consult an insurance provider for more information.