People who live in rented apartments and homes need insurance protection that only HO-4 insurance can provide and not the landlord’s insurance. HO4 insurance, also called renters insurance, protects renters from unexpected accidents or incidents in the rented apartment.
This is why Most landlords require tenants to purchase HO-4 insurance or renters insurance from major property insurance companies.
Before buying an HO-4 policy, it’s important to know what it is, what it covers and what it doesn’t cover, and the possible amount of HO-4 protection you need.
This article gives you the definition of HO4 insurance and the important information you need about this insurance policy.
HO4 Insurance Defined
If you rent a house or an apartment, the landlord’s insurance policy only provides coverage for the structure or property. Anything that belongs to the tenant is covered under a renters insurance policy. This covers you, the tenants, your belongings, and potential liabilities that may occur while you live in the property.
An HO-4 renters insurance policy provides “named perils” coverage. This means the policy’s terms define the type of calamities, also called perils, it will cover.
What Does H04 Insurance Cover?
HO4 insurance covers 4 key items:
- Damages or losses to your personal belongings
- Temporary or additional living expenses (ALE) if your house or apartment becomes uninhabitable.
- Liabilities, including legal fees, if you’re sued, and
- Other people’s medical bills if their loss or damage is your fault.
Personal Property (chattel or belongings)
Personal property is also called chattel and classified as any belongings unattached to a structure or building property.
When a covered peril destroys or damages your personal belongings, your H04 personal property coverage should help pay to replace them. The items covered under personal property coverage include:
- Electronics such as TV sets, Laptops, and computers, music systems, etc.
- Drapes, linen, and clothing
- Cookware, dinnerware, and utensils
- Sporting equipment
Insurance providers set limits on certain personal stuff. For example, the coverage of expensive personal belongings such as Jewelry, watches, Fine art, and collectibles depends on your agreement with your insurer. You may need to add them as add ons or endorsements or increase your limit for added protection.
Additional Living Expenses
Imagine coming home to a horrible scenario of your house on fire, and although everyone is ok, not only are your belongings destroyed, but the house is also uninhabitable.
In this scenario, if you have renters insurance, additional living expenses coverage will help pay for your temporary accommodation and meals until you can find another shelter. In most cases, the coverage will be something similar to what you had. For example, if your apartment was one bedroom, additional expenses coverage cannot pay for your accommodation in a mansion.
Note: If your temporary living place is a hotel, keep all receipts for meals and accommodations so that you can speed up the claims process.
If your guest slips, falls or gets injured in your home, for example, bitten by your dog, your HO4 can cover their medical bills through personal liability coverage. If you’re sued, the personal liability coverage can also pay legal expenses, including lawyer’s fees and court costs.
Most insurers offer default liability limits ranging between $100,000 and $300,000, including medical payments coverage of $1,000 to $5,000. If you need more medical coverage, you can ask your insurer to raise your limits.
How Does an HO4 Insurance Policy Work?
When you purchase an HO4 policy, you’re buying a financial safety net for you, your personal belongings, and others in case of an unexpected loss or damage. The cause of the unexpected loss or damage should be “named” in your HO4 policy for you to benefit from the insurance through compensation.
For example, if a burglary occurs and your personal belongings are stolen, or if a windstorm or fire destroys your stuff, your HO4 renter’s insurance should pay for your damages or losses. Similarly, suppose your apartment or rental home’s hot water tank suddenly ruptures, and water damages your belongings such as the sofa or oriental rug. In that case, your renters insurance should help you sort the damages.
What Doesn’t HO4 Insurance Cover?
Standard HO4 renters insurance provides basic protection, with most providers allowing you to choose optional coverages if you increase your limits.
Some of the perils that standard HO-4 policies don’t provide coverage include:
- Earthquake, flood water damage, rust, and mold. You can purchase these policies separately because most insurers offer them as optional coverages.
- Structural damage. This is covered in standard homeowners insurance policies. If a covered peril destroys the structure of your apartment unit, the landlord’s homeowners insurance will pay for repairs.
- Your medical expenses. The HO4’s personal liability coverage only helps to pay medical expenses for other people who sustain an injury in your apartment. It doesn’t pay your personal medical bills. For this, you can rely on your health insurance.
- Vehicles. If your vehicle is damaged or stolen, you’ll use your car insurance and not your renters insurance.
Who Needs HO4 Insurance?
Anyone who rents a home, an apartment, or a condominium needs renters insurance. Often, landlords may require their tenants to carry renters insurance, but not all landlords specify this.
The benefit of having a renters insurance policy is that it reduces the amount of legal liability you may be required to shoulder if your guest is injured in your home.
Other types of people who may need renters insurance are:
- College students living in dorms
- People who rent rooms in homes
- Tenants in apartments
- College students living off-campus in rental house or apartment
- Renters in high-crime areas
- Renters with pets
- Renters in disaster-prone areas
Note: Renters who share a home or apartment should decide if they need a single policy that covers the whole household or a separate renters policy, one for each person.
How Much is HO4 Insurance?
The cost of any insurance policy depends on different factors. The price of HO4 insurance depends on factors such as your apartment’s:
- Condition of the building
- Your claims history
- The amount of belongings
- The amount of coverage you need
How Much HO-4 Insurance do I need?
In many cases, the amount of renters insurance you need is directly proportional to the cost of your belongings and the insurance deductible you agree to pay.
The steps you need to follow to determine the amount of renters insurance coverage you need are:
- Take an inventory of all your personal belongings.
- Determine the cost of replacing each of them
- Sum their total replacement costs.
You may need to understand the difference between replacement costs and actual costs:
- Replacement cost. This is the cost to replace the item and not the item’s original cost.
- Actual cost. This is the actual cost of the item when you bought it. The insurer will calculate its depreciation cost and give you the balance when paying your claim.
The actual costs are often cheaper when buying insurance, but it also means you’ll get less payment.
Now that you understand what HO4 insurance is and how it works, do you have any other questions? If you rent an apartment or a house, you need HO4 renters insurance to save you from liability. When you’re buying renters insurance, confirm your deductible rate so that you can benefit from both affordable rates and better coverage limits.