There are several different types of homeowner’s insurance each of which offers different levels of protection and coverage. An HO-4 homeowner’s insurance plan, also called renter’s insurance, protects a renter’s personal property and liability. If you rent a condo, apartment, townhome, or home, and have insurance, then you likely have an HO-4 policy. HO-4 insurance plans differ from HO-1, HO-2, and HO-3 plans as HO-4 plans are for renters, not homeowners.
Most of the top home insurance providers offer the HO-4 renters policy.
What Does an HO-4 Policy Cover?
An HO-4 policy is a named perils policy. This means that it covers all the damage to your personal property sustained by one of the perils listed in the agreement. Any damage sustained to your property by a peril not included on the list will not be covered under the policy.In general, the HO-4 renter’s policy includes 16 perils
- Fire of lightning
- Windstorm or hail
- Riot or civil commotion
- Aircraft damage
- Falling objects (boulders, trees, etc.)
- Weight of ice, snow, or sleet
- Accidental water overflow or sleet
- Sudden or accidental tearing, cracking, or bulging of house systems
- Freezing damage
- Damage from artificial electric currents
HO-4 policies cover damage to your personal property for any peril on this list. If your property is damaged by a peril that is not included on this list then it will not be covered by your policy.
HO-4 policies are specifically for the personal property you own while renting a home or apartment. For instance, say there is a gas leak that causes an explosion in your apartment and your laptop and tablet are damaged. HO-4 insurance will pay to have those items replaced. Since they are specifically designed for personal property, renter’s insurance usually covers all of your stuff, including clothes, electronics, furniture, artwork, etc.
Personal property coverage on HO-4 policies is broad. So if your HO-4 policy has property coverage up to $100,000 then it will cover up to $100,000 in costs in lost or damaged property.
HO-4 policies are usually replacement cost policies. That means that any lost or damaged belongings are replaced with brand new materials at the current market cost. So if your laptop gets destroyed in an explosion, your policy will pay to replace it with an identical one at its current market value.
This is opposed to actual cash policies. Actual cash policies reimburse you for the current value of the lost item. Actual cash policies take depreciation of the item into account. So a damaged item will be reimbursed for what it is currently worth, which may be less than your originally paid for.
HO-4 plans also offer liability insurance. Liability insurance will protect you in the case that someone is injured in your home. If someone is injured in your apartment or townhouse, then liability insurance will cover any legal fees or damages up to a certain amount. So if your plan has a maximum of $100,000 in liability coverage, insurance can cover up to $100,000 in liability costs.
HO-4 insurance plans also include medical costs. If a person is injured in your house, your insurance will cover some or all of their associated medical expenses. Medical expenses include things like:
- Surgical costs
- Lab tests
- Diagnostic tests (x-ray, MRI, etc.)
- Hospital fees
- Medication expenses
Keep in mind that medical cost coverage is separate from liability coverage. The two categories could have different maximum amounts of coverage and one does not apply to another. In other words, you can’t use your liability limit to pay for other people’s medical expenses. Medical expense limits are usually set by the policyholder and can amount to a few thousand dollars.
What Is Not Covered by HO-4 Policies?
HO-4 policies do not include insurance for damages to your dwelling. Given that renters do not own the buildings they live in, they are normally not accountable for damages to the property, aside from those they directly cause.
HO-4 policies also do not typically cover additional living costs. If your apartment is rendered uninhabitable by some event then an HO-4 plan will not reimburse you for any extra living expenses such as hotel or Airbnb fees. So if you are put out of your apartment, you will be responsible for those extra costs out of pocket.
Some providers will allow you to add supplemental additional living insurance that will reimburse you for extra living costs.
Do I Need Renters Insurance?
Typically, no, you are not required by law to have renter’s insurance. That being said, many landlords require tenants to get renter’s insurance. Landlords might require tenants to purchase renter’s insurance to mitigate the risk that they will be pursued for legal issues or medical costs.
Landlords will typically have a dwelling policy on the property but that will not cover your personal property.
However, even if you are not required to get renter’s insurance, it can be a good idea to do so. Renter’s insurance is a useful tool to protect yourself from bad financial disasters. Renter’s insurance can help seriously insulate you from the potential negative costs of a disastrous event. Lower-income people are usually less able to replace their possessions if they are damaged, so they can greatly benefit from renter’s insurance in case of a disaster.
In general, the lower-income a person the more they stand to benefit from renter’s insurance, especially liability coverage. Legal fees can be a ridiculous financial handicap for someone who does not make a substantial income and liability suits can happen to anyone.
That being said, even wealthier renters can benefit from renter’s insurance. Uninsured costs for major liability issues can be compensated for by a comparatively cheap rental insurance plan. If a wealthier tenant purchases a rental insurance agreement with a high limit to their coverage, their expenses can be limited only to the initial deductible.
Rental insurance can also be a good deal for college students. College students usually have a low income and would not be able to handle a disastrous event without being put into substantial debt. Renter’s insurance is moderately flexible and buyers can add endorsements for any additional coverage.
HO-4 insurance policies, also called renter’s insurance, can be a great benefit to low-income renters who do not have a lot of savings. A comparatively small monthly premium can save you a lot in the long run in the unfortunate event of a disaster. Renter’s insurance is not expensive either. The average rental insurance premium in the US is around %17 a month, which comes out to about $197 per year. That comes with about $40,000 in property coverage, $100,000 in liability coverage, and a $1,000 deductible.
Frequently Asked Questions
What does an HO-4 policy cover?
An HO-4 homeowner’s insurance plan, also called renter’s insurance, protects a renter’s personal property and liability. If you rent a condo, apartment, townhome, or home, and have insurance, then you likely have an HO-4 policy.
What does an HO-4 policy cover?
An HO-4 policy is a named perils policy. This means that it covers all the damage to your personal property sustained by fire of lightening, falling objects, smoke, vandalism to name a few.
Am I required to have renter’s insurance?
Typically, no, you are not required by law to have renter’s insurance. That being said, many landlords require tenants to get renter’s insurance like a HO-4 policy. Landlords might require tenants to purchase renter’s insurance to mitigate the risk that they will be pursued for legal issues or medical costs.