Why are the premiums for homeowners insurance more expensive than those of renters insurance?
1. Higher value of a home
If you own a home, the value of it as a property is substantially higher than that of a rental unit. By default, your homeowners insurer will incur more to repair your home damages unlike for a rental unit. Possible risks of loss in a rental property are not as high. This reflects in lower premiums for rental unit dwellers.
2. Many considerations for coverage
In your home, there are many coverage options, perhaps too many. You decide the risks of loss to transfer to an insurer and which to retain yourself. Since these many coverages might be bundled in a single policy, they are reflected in higher premiums.
Now consider a rental unit dweller, coverage options might not be too many for them. Even when bundled, they are substantially fewer hence lower premiums.
3. Higher risk exposure
If you own a risk, there are many risks you are exposed to. These could be risks to your house premise, assets in it, or even a third party who could be a visitor. There are too many risks of loss if you are transferring to an insurer. By logic, you would expect to see higher premiums compared to a dweller of a rental unit.
4. Demands by mortgagee
If you own a home, premiums are by default higher than those of someone renting their dwelling unit. This all changes when you are buying a home under a mortgage loan. Mortgagees will often demand and enforce certain insurance covers until the day you will pay up your mortgage in full.
This is being cautious by a mortgagee to protect their investment. They often try to procrastinate possible risks of loss that would occur before the mortgage loan is fully paid.