An HO-4 policy is the technical term for renters insurance. If you live in a rental — whether it’s a house, apartment, room, or any other type of rented dwelling — it’s a good idea to have renters insurance. In fact, many landlords require their renters to carry an HO-4 policy as a condition of the lease agreement.
Below, we’ll review what HO-4 insurance does and doesn’t cover, how renters insurance compares to other policies, and how to choose the best renters insurance for your needs.
What does HO-4 insurance cover?
A standard HO-4 insurance policy protects your personal belongings and protects you financially if you’re responsible for someone else’s injuries or property damage. Here’s what renters insurance typically covers:
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Personal property coverage: If your belongings are damaged due to a covered risk (called a peril), personal property coverage can help replace what you lose.
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Personal liability coverage: If you’re found to be at fault when someone gets injured in your rented space or when their personal property is damaged, personal liability coverage can help pay for legal costs or medical expenses.
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Loss of use coverage: Many renters insurance policies also include loss of use coverage. If your apartment or rented home becomes temporarily unlivable due to a covered peril, your insurance can help pay for temporary living expenses until you can move back into the space you rent.
Covered perils in renters insurance
Notably, HO-4 insurance only provides coverage for loss or damage resulting from specific hazards. This is called named-peril coverage. Generally, these perils include:
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Fire or lightning
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Windstorm or hail
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Explosion
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Riot or civil commotion
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Aircraft
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Vehicles
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Smoke
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Vandalism
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Theft
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Volcanic eruption
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Falling object
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Freezing
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Weight of ice, snow, or sleet
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Accidental water overflow or steam
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Sudden and accidental tearing apart, cracking, burning, or bulging of certain household systems
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Sudden and accidental damage from artificially generated electrical current
What’s not covered by HO-4 insurance?
An HO-4 policy is designed for renters and thus only protects their property and liability. Landlords carry a separate landlord insurance policy to get coverage for the physical structure of the rental and any of their own property kept on site, such as appliances and furniture.
Renters insurance isn’t a catch-all for renters, either. Certain risks are not covered by an HO-4 insurance policy, including:
How much HO-4 insurance do you need?
How much HO-4 insurance you need depends on the value of your personal property and how much risk your rented space poses to guests.
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Personal property value: Take stock of your belongings. What do you own, and how much is it worth? You’ll want a personal property coverage limit that’s high enough to replace all of your possessions following a disaster like a fire.
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Liability risk: Think through your rental’s risk level. For instance, if you regularly host parties, have pets, or have a trampoline (or another attractive nuisance), you may want to consider a higher personal liability policy limit in case of guest injuries.
Optional coverages to consider
Beyond the standard protections offered by renters insurance, tenants should look into these additional coverage options:
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Flood and earthquake insurance: Floods and earthquakes are among the most notable perils excluded in HO-4 policies. If floods and earthquakes are a threat where you live, you can purchase a separate flood or earthquake policy.
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Scheduled personal property coverage: Renters with expensive jewelry, fine art, or rare collectibles (from signed baseball cards to designer purses) can get scheduled personal property coverage. This is ideal if your valuables exceed the standard personal property coverage limits included in your HO-4 policy.
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Personal umbrella policy: If you’re worried your renters insurance policy doesn’t include enough liability coverage, you can get additional protection with umbrella insurance. This helps pay for costs that exceed your liability limits if you’re deemed responsible for someone else’s injuries or property damage.
How does an HO-4 compare to other insurance policies?
You’ve probably noticed that major insurance policies start with HO and then include a number, like HO-4 for renters insurance or HO-3 for the most common home insurance policy. These terms refer to the standardized forms used by the insurance industry for each policy type. So, how does an HO-4 policy compare to other home insurance types?
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HO-3 vs. HO-4: An HO-3 is a standard home insurance policy. Homeowners purchase this to protect the property itself, their belongings, and liability. An HO-4 policy excludes coverage for the physical structure of the rental property, as it is typically insured by the landlord’s insurance policy.
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HO-4 vs. HO-5: HO-3 and HO-5 policies are very similar; they only differ in how they cover some of your property (specifically, which perils are covered). HO-4 insurance is different from HO-5 insurance in the same way it differs from HO-3 — HO-4 coverage is designed for renters (no physical structure coverage), while HO-5 is designed for homeowners (the physical structure is covered).
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HO-4 vs. HO-6: An HO-6 policy is designed for condo owners, who have a vested interest in insuring the physical structure of their individual unit. The condo association separately insures the building as a whole and the common areas. Compared to HO-4, HO-6 condo insurance is a little more comprehensive in that it insures part of the actual dwelling itself.
Who needs renters insurance?
Renters insurance is not required by law. But anyone who rents out a living space — whether it’s a rental apartment, home, studio, or even just a room — should consider renters insurance. Many landlords require their renters to carry it. And even if yours doesn’t, it will be nice to have it in the event of a significant loss or major damage.
A lot of people don't realize that renters insurance protects your stuff even when it's not actually inside your apartment. For example, if your laptop or suitcase is stolen out of your locked car while you're traveling, your renters policy can help pay to replace those items. This coverage is helpful in other places, too — like if your bike is stolen from a bike rack at the grocery store. Your belongings are protected almost anywhere you take them, which can give you peace of mind whether you’re at home or out and about.
How to choose an HO-4 policy
When choosing an HO-4 policy, consider a few factors:
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Coverage limits: Policies with higher limits cost more, but if you have a lot of valuable belongings, you may need higher limits than standard policies offer. Similarly, if you think you’re at a higher-than-average risk of someone being injured on your property, you may want a higher liability limit.
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Endorsements: If you have specific high-value items, such as jewelry, sports equipment, electronics, or musical instruments, you may want to consider an endorsement to increase coverage for these items.
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Deductibles: Choosing a lower deductible means you’ll pay less out of pocket in the event of a claim. However, lower deductibles result in higher insurance premiums.
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Replacement cost value vs. actual cash value: In the event of covered damage, policies with replacement cost coverage will pay out enough to cover the current cost of replacing your items. In contrast, actual cash value policies are cheaper, but they only pay the depreciated value of your belongings, which is unlikely to be enough to cover the full cost of replacing them today.
Frequently asked questions
Is HO-4 the same as renters insurance?
Yes, HO-4 insurance is the technical term for renters insurance. As a renter, you may be required to carry an HO-4 policy. Even if you aren’t required, experts recommend protecting your finances by purchasing a renters policy.
Does HO-4 cover theft?
Yes, HO-4 covers theft. HO-4 policies cover 16 named perils (in simple terms, hazards), including theft, vandalism, and fire.
Does HO-4 cover roommates?
Your HO-4 policy likely only covers your own property. If you have a roommate, they should purchase their own renters insurance policy to ensure their belongings are also covered.
