There are numerous types of home insurance policies to choose from, and not all of them are geared toward homeowners specifically. If you rent an apartment, condominium or house as your personal residence, you may need an HO-4 insurance policy, otherwise known as renters insurance. Along with covering your personal belongings, such as clothing, electronics and furniture, HO-4 insurance also provides personal liability protection.

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This type of insurance is widely available, easy to obtain and is generally pretty affordable, but before you purchase a policy, it can be helpful to know more about an HO-4 policy. Bankrate’s insurance team is offering extensive insight into renters insurance, which could help you choose the coverage that is right for your needs. Plus, understanding what HO-4 policies cover, what they do not cover and who needs coverage could help you feel more confident in your insurance decisions.

What is HO-4 insurance?

HO-4 insurance is the technical term for renters insurance. While your landlord insures the physical structure of the building you live in, an HO-4 policy protects your personal possessions if they are damaged under certain circumstances.

On top of that, most HO-4 policies typically provide liability insurance. If someone is injured on or in your rental property and you are found negligent for their injuries, your policy may cover your legal expenses and any medical expenses you may be held responsible for. Liability coverage can also cover reimbursement for any visitor’s property that is damaged while at your rental property.

What does an HO-4 policy cover?

A standard HO-4 policy covers 16 specific perils. That means if your personal property is damaged due to one of these events, your insurance company should reimburse you. Generally, damage caused by the following perils is covered by an HO-4 policy:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riot / civil commotion
  • Damage from aircraft
  • Damage from vehicles
  • Smoke
  • Vandalism / malicious mischief
  • Theft
  • Volcanic eruption
  • Falling object
  • Weight of snow, ice or sleet
  • Overflow of water or steam from plumbing, HVAC, etc.
  • Sudden breakage of a hot water heater, etc.
  • Frozen pipes
  • Electrical currents

Most standard HO-4 policies also include additional living expenses (ALE). If your rental is uninhabitable while repairs are made after a covered loss, your insurance policy could pay for your living expenses elsewhere, like a nearby hotel.

When one of the covered events occurs, and your belongings are damaged, you can file a claim with your insurance company. First, however, your provider will subtract your deductible from the damage estimate. The deductible amount is what you’re responsible for covering in the event of a claim.

Typically, the lower the deductible, the higher your premium, but you will pay less out of pocket in the event of a claim. Weighing the pros and cons of both situations could help you find a balance that makes sense for your short-term budget and your long-term financial health in the event of an emergency.

HO-4 policy exclusions

In general, HO-4 policies do not cover damage caused by certain perils, including:

Your policy may include additional exclusions, so read the paperwork carefully or speak with your insurance agent to review your policy. If you live in an area that’s prone to an excluded peril, you may want to consider adding an endorsement to your policy or getting a separate insurance policy for that peril. For example, if you live in a part of California that’s prone to earthquakes, purchasing an earthquake endorsement or an earthquake policy could help protect your finances against catastrophic damage to your belongings.

Who needs HO-4 coverage?

HO-4 coverage is designed for renters, whether you rent an apartment, condominium or house. While a state does not legally mandate renters insurance, many landlords will require you to have a policy and could mandate a minimum limit of liability coverage. You should read your rental agreement carefully to make sure you’re fulfilling your legal responsibility with the right amount of coverage. Even if an HO-4 policy isn’t required, it still may be smart to have your belongings covered.

Also, think about the amount of coverage you need. You can start by creating a home inventory to estimate the value of your possessions, and then you could take out a policy that will cover at least that amount. You also will want to consider your liability exposure. Do you have a pet that could potentially hurt someone? Do you host guests often? Working with a licensed agent may help you decide how much coverage is appropriate for your needs.

Where can I get HO-4 insurance?

HO-4 insurance is widely available through insurance companies, including national, regional and local carriers. You can even apply for HO-4 insurance entirely online. Comparing multiple carriers before choosing a policy could help you find the coverage you need at a competitive price.

Also, shop around for available discounts. Often, insurers apply discounts if you have multiple policies with them, such as your HO-4 renters policy and auto insurance. You may also save by paying your annual premium all at once rather than month to month. There are also other common discounts, like having no previous claims or having security alarms and smoke detectors.

How much does HO-4 insurance cost?

According to the Insurance Information Institute, the average annual premium for renters insurance in the U.S. was $174 in 2019. That means, on average, it could cost just about $14.50 per month for a standard HO-4 policy.

The price of your renters insurance policy depends on certain contributing factors. Your state plays a large role in your premium. For example, renters in South Dakota pay an average of $117 per year for renters insurance, while renters in Mississippi pay $252 per year, on average. Additional rating factors include your claims history, how much coverage you purchase and your deductible level. Still, renters insurance is fairly inexpensive, considering the amount of financial protection you can purchase.

Frequently asked questions

    • The best company for your needs may be different from the best company for someone else. Everyone has different needs when it comes to renters insurance coverage. Understanding what you are looking for — like the lowest price, a certain coverage or particular discounts — and getting quotes from several carriers might help you find the company that is right for you.
    • If you have a renters insurance policy and experience a covered loss, you file a claim with your insurance company. The company will review your claim and decide if it is covered or not. If the claim is covered, you will typically be paid for the damages (minus your deductible). For example, if a pipe bursts in your wall and causes damage to your furniture and clothing, you could file a claim for those damages. If the claim is approved, you would receive a check in the mail for the value of your belongings.
    • It depends. Renters insurance may cover your pet for liability if your animal injures a guest or causes damage to a guest’s property, but it’s important to note that exotic animals and certain dog breeds are often excluded from coverage with certain property insurers. If you have one of the animals that is typically excluded from coverage, you may have to spend some extra time looking for a company that is willing to extend liability coverage to you. However, renters insurance does not cover medical fees for your animal. For that, you would need pet insurance, which is essentially health insurance for your animal.
    • Renters insurance is usually a fairly simple policy, which means it is relatively quick to get. You can usually get a quote and purchase a policy that is effective the same day or the following day. However, if you have a prior claims history, an excluded animal or any other circumstance that could hinder your application process, you may want to give yourself more time to find coverage. Additionally, if a major storm is headed toward an area, companies commonly issue a moratorium, which prevents the company from selling insurance policies in affected areas. This helps insurance carriers manage their risk when the threat of damage is high; a number of renters buying coverage and then filing claims before paying much premium could financially damage a company. If you live in an area that is prone to storms, having coverage in place before a storm is on the way could be the best path.
    • It may be a common misconception that your auto insurance policy would cover personal items left in your vehicle should something happen to them, but that’s not usually the case. If your radio was stolen from your vehicle, that would likely be covered under your auto insurance with the right coverage. However, if your laptop or other personal items were left in your car and were stolen, your property insurance usually covers these items (minus your deductible).