HO-4 Insurance: What It Covers and Who Might Need It

You’re probably aware that homeowners typically have home insurance coverage, but what about renters? If you’re renting an apartment, studio or home, chances are your landlord requires you to purchase a renters insurance policy, also known as an HO-4 policy. Although it provides personal property coverage just like a homeowners insurance policy, an HO-4 policy is quite different. Bankrate’s insurance editorial team explains what protection a renters insurance policy provides and illustrates why you may want to purchase this affordable coverage even if your landlord doesn’t require it.

What is HO-4 insurance?

You may see home insurance policies listed as HO-#, ranging from one to eight. A standard homeowners insurance policy is usually listed as HO-3, but renters insurance is an HO-4 policy. You’ll likely need a renters insurance policy if you rent an apartment, room, studio or house from a landlord who actually owns the building.

Most landlords require you to purchase renters insurance, so your personal belongings are covered in the event of a covered peril. In turn, landlords carry insurance that covers the physical structure of the place you’re renting.

In addition to personal property coverage, an HO-4 renters policy gives you liability insurance. So, if you have people over at your place and someone gets injured (and you’re found negligent), the policy could pay for your legal expenses if they decide to sue. It might also pay for medical expenses incurred by your guest along with any property of theirs that might have been damaged at the same time.

Renters insurance policies also include a useful type of coverage — additional living expenses coverage. Say you had to file a claim because a covered peril damaged your apartment. If you can’t live in the apartment while repairs are under way, your insurance policy could pay for you to stay in a hotel. Plus, it could also cover the cost of restaurant meals and pet boarding.

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 up to your coverage limits. 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

How an HO-4 policy works

An HO-4 provides a few types of coverage: personal property and liability. If a covered peril causes damage to your belongings, or you have people over and someone gets injured on your property, your renters insurance policy can kick in to provide coverage.

To file a claim, you’ll typically have to pay a deductible. This amount is listed in your policy’s terms and conditions, so you may want to find that information and be prepared to pay it at a moment’s notice. Once you pay the deductible, your insurer will investigate the claim before approving or denying it. If approved, be aware that you’ll receive reimbursement up to a specific coverage limit (also listed in your policy agreement).

To keep costs low, most renters insurance policies factor depreciation into the value of your personal belongings. If you are willing to pay a little more for replacement cost value coverage, you’ll receive a higher payout that reflects the cost of replacing your damaged belongings with new items.

What real-life customers are saying about renters insurance

Renters insurance can be an inexpensive way to cover your belongings and protect your finances if someone sues you after getting injured on your property. But is HO-4 insurance really worth it? Seeing what real-life customers say about renters insurance can help you determine if it’s right for you. 

Reddit

Reddit is an open forum where consumers, insurance agents, underwriters and more can discuss topics like renters insurance. Here are some recommendations Reddit users offered someone looking for renters insurance.

*The quotes and citations included on this page have been verified by our editorial team and are accurate as of the posting date. Outlinked content may contain views and opinions that do not reflect the views and opinions of Bankrate.

What an HO-4 policy excludes

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

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

Your policy may include additional exclusions, so it’s a good idea to 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 standalone insurance policy. For example, you may benefit from earthquake or flood insurance depending on where you live.

Who needs HO-4 coverage?

HO-4 coverage is designed for renters in a variety of home types. These policies may apply if you rent an apartment, condominium or house. While renters insurance is not a legal requirement, many landlords will require you to carry a policy and could mandate a minimum limit of liability coverage. You’ll likely want to 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 one in place to financially protect yourself.

To determine how much rental coverage you need, it may be helpful to determine the value of your personal property and your relative level of liability risk. You may want to start by creating a home inventory to estimate the value of your possessions. You also may 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.

HO-4 vs. HO-6 insurance

While HO-4 is a type of insurance designed for renters, HO-6 policies are written for people who own a condo. Like a rental apartment, a condo is a part of a larger building that carries its own policy. In the case of a condo, building insurance is usually managed by the homeowners association (HOA).

In terms of coverage, the primary difference between HO-4 and HO-6 insurance is that HO-6 insurance includes interior finishings and HO-4 policies don’t. If a covered event ruins your countertops or crown molding, for instance, HO-6 policies would typically cover the damage. An HO-4 policy would not. In short, renters insurance is primarily for your personal belongings, while HO-6 coverage has a bit more reach.

Perils covered by HO-6 typically include dwelling coverage for materials like flooring, personal liability coverage, personal property coverage and loss of use coverage.

Where can I get HO-4 insurance?

Almost any insurance company that writes home insurance policies will also offer HO-4 renters insurance. If it doesn’t, the company most likely partners with a renters insurance provider to offer coverage.

You can typically request HO-4 coverage by getting quotes online. You may want to select several providers and get multiple quotes to compare to ensure you’re getting the coverage you need at a price you can afford. Try to use the same coverage limits for each quote, so you can easily compare your options.

As you compare quotes, don’t forget to consider discounts you may be eligible for. One of the most effective discounts is usually the bundling discount. If you purchase renters insurance from your auto insurance provider, you may be able to save on each policy, which could be significant savings.

How much does HO-4 insurance cost?

Renters pay an average annual premium of $170 in the U.S., according to the Insurance Information Institute, which works out to an average of $14 per month for a standard HO-4 policy.

Compared to homeowners insurance, which costs an average of $2,397 per year (or about $200 per month) for a policy with $300,000 in dwelling coverage, renters insurance is considerably more affordable. That said, the price you pay for coverage depends on many personal factors, like your claims history, coverage limits, your deductible and your location.

For instance, the state where you live is a huge factor in how much you pay for renters insurance. A renter in Oklahoma pays $221 per year, according to the Insurance Information Institute, while renters in North Dakota pay $114 per year. 

Frequently asked questions

• Is HO-4 insurance the same as renters insurance?
  

  Renters insurance and HO-4 policies can be used interchangeably because they’re the same type of policy. You may even see this type of coverage referred to as tenant insurance (to distinguish it from landlord insurance). If you’re unsure whether you need renters or homeowners coverage, consider whether or not you own the property where you live. If you don’t, you most likely need renters insurance to cover your personal property and provide liability coverage.

• What is the best renters insurance company?
  

  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.

• How much renters insurance do I need?
  

  Most insurance experts recommend you have enough coverage that you would be able to replace all of your personal possessions if they were damaged, destroyed or stolen. One way to determine this number is to do a home inventory, listing your belongings, along with information including date of purchase, serial numbers, any appraisal documents and receipts, if you have them. It may also be helpful to take photos of your belongings to save with the inventory. Additionally, you may want to consider your potential liability exposure and the cost of living in your area to determine how much liability and additional living expenses coverage you may need.

• Does renters insurance cover pets?
  

  It depends. Renters insurance may cover your pet for liability if your animal injures a guest or causes damage to a guest’s property. However, 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 likely need pet insurance, which is essentially health insurance for your animal.

• Does renters insurance cover my belongings outside my home?
  

  Most renters insurance policies cover the theft of your belongings while you are away from home in certain situations. For instance, Progressive policies cover theft when you’re on vacation, you’re moving or your items are stolen from a storage unit. Policies may also offer protection for theft from a car or hotel room. Keep in mind that your same coverage limits apply, and theft claims usually require a police report.