HO-4 insurance

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As a renter, your lease likely comes with a few responsibilities like paying a security deposit to lessen the risk of any future damages that could later cost your landlord. Most leases also require that you take out an HO-4 renters insurance policy. This financial investment offers you protection, not your landlord.

While an HO-4 policy is not exhaustive, it does offer some security if certain events cause damage in your rental home.

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 in which you live, 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 your property and tries to sue you, your policy may cover your legal expenses and any medical expenses you may be held responsible for.

Alternatively, the coverage can 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. Here’s what is included:

  • 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 not inhabitable while repairs are made, your insurance policy will 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. That’s the amount for which you’re responsible.

The lower the deductible the higher your premium will be, but you will pay less when you file a claim. Weigh the pros and cons of both situations to find a balance that makes sense for your short-term budget and your long-term financial health in the event of an emergency situation.

HO-4 policy exclusions

In general, HO-4 policies do not include damage from certain perils. Here’s a list of typical excluded perils:

  • Flood
  • Earthquake
  • War
  • Nuclear accident
  • Landslide
  • Mudslide
  • Sinkhole

Your policy may state additional exclusions, so read the paperwork carefully. If you live in an area that’s prone to an excluded peril, you may want to get an add-on to your policy. For example, if you live in a part of California that’s prone to earthquakes, it may be worth paying for additional coverage. If your belongings are damaged due to any of these perils and you don’t have an additional policy, you won’t receive any financial reimbursement from your insurance carrier.

Who needs HO-4 coverage?

HO-4 coverage is designed for renters, whether your home is an apartment or house. Most lease agreements require that you get HO-4 coverage. Read your 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. Estimate the value of your possessions, and take out a policy that will cover at least that amount. Even if your landlord only required a $10,000 policy, you may want more coverage, especially if you have expensive furniture, artwork or other items that exceed the standard policy value.

Frequently asked questions

Where can I get HO-4 insurance?

HO-4 insurance is widely available through insurance companies, both national and local ones. You can even apply for HO-4 insurance entirely online. Do consider comparing multiple carriers before picking a policy. You may be able to save money or get better coverage. Remember to consider how much liability coverage you receive and the limitations surrounding additional living expenses. These details may not seem important now, but those costs can add up when you need them.

Also shop around for available discounts. Oftentimes, insurers shave off costs if you have multiple policies with them — such as your HO-4 renters policy and your auto insurance policy. You may also save by paying your annual premium all at once rather than month to month. It’s easy to qualify for other common discounts, like having no previous claims or installing security alarms and smoke detectors.

How much does HO-4 insurance cost?

The price of your annual renters insurance policy depends on a few contributing factors, like where you live, how much you’re insured for and the size of your deductible. Still, it’s a fairly inexpensive type of insurance policy considering the amount of coverage you get.

According to the Insurance Information Institute, the average annual premium in the U.S. was $180 in 2017. That means on average, it could cost just about $15 a month for a standard HO-4 policy. Where you live also plays a major role. Mississippi is ranked as having the most expensive annual premium at $258 per year. Alternatively, South Dakota has the cheapest average renters insurance at just $123 a year.

What’s the difference between HO-4 and HO-6 insurance?

HO-4 and HO-6 insurance policies may seem similar, but they’re completely different. An HO-4 policy covers you for certain events while you’re renting. An HO-6 policy, on the other hand, is designed for condo owners.

Even though they own the unit, condo owners usually have shared spaces and structures covered by the homeowners association (HOA). The HO-6 policy covers things that aren’t shared within a condo, like the walls, ceiling and floors.

Written by
Lauren Ward
Insurance Contributor
Lauren Ward has nearly 10 years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, and Reviews.com. She covers auto, homeowners, and life insurance, as well other topics in the personal finance industry.