HO4 Renter's Insurance Policy
Unlike most people that take out a mortgage to buy their home or condo, renters are not obligated to purchase homeowners insurance.
However, if you rent an apartment or home of any kind and you have a good amount of personal property that you value, obtaining a HO4 renters insurance policy is a very inexpensive way to protect your personal belongings.
Just like a standard HO2 form, an HO4 policy is a named perils policy that specifically names the types of disasters for which you are covered (see below).
The main difference between an HO2 and an HO4 policy is that renters insurance does not cover the building or dwelling but only your personal property. The dwelling exclusion makes sense since as a renter you are not responsible for repairing or replacing damage to the structure caused by a storm or other natural disaster. Also, HO4 policies do not include loss of use coverage for expenses incurred if you are forced to move out during the repair process.
HO4 usually includes general liability coverage and some medical expense coverage for visitors injured on the property.
Know What’s Covered and For How Much
Renters insurance will provide reimbursement for loss or damage caused by any of the following commonly included perils.
- Fire or Lighting
- Hail storms
- Riots or civil unrest
- Volcanic eruption
- Theft or Vandalism
- Falling objects (trees, parts of the home, etc. – however, you must show that the object fell due to one of the listed perils and not simply due to lack of maintenance or negligence on the homeowner’s part)
- Weight of Ice, Snow, or Sleet
- Accidental discharge, leakage or overflow of water or steam from within a plumbing, heating or air conditioning system or domestic appliance
- Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system or of appliances for heating water
- Sudden and accidental damage from artificially generated currents to electrical appliances, devices, fixtures and wiring
- Sudden & Accidental Damage from Artificially Generated Electrical Current
As with most homeowners insurance policies, you will note that damage from flooding is not included and requires a separate policy.
Also, with renters insurance it’s important that you decide whether you want actual cash value coverage (typical and cheaper) or replacement cost coverage.
Actual cash value will pay you what the item is worth today with deductions for age and wear and tear while replacement cost will pay you the full amount to replace the lost or damaged item with an item of similar quality.
If most of your property is old and worn down, actual cash value coverage will pay you pennies on the dollar and leave you with a major gap between your insurance check and what it would cost to repurchase whatever you lost.