An HO4 policy, also called renters insurance, protects a renter’s personal property and addresses their personal liability. In other words, it can help pay for:
Depending on where you buy this policy, it may come with other protections, too. For example, some HO4 policies also include loss of use coverage. This can help pay for temporary living expenses when a covered incident makes your place uninhabitable.
No matter the type of property that’s rented – home, condo, townhome, or apartment – HO4 is the type of home insurance policy designed for renters.
HO4 insurance is a named perils policy, which means the coverage steps in when the incidents listed in the policy damage your stuff.
HO4 policies usually cover damage caused by these 16 named perils:
So say, for example, someone breaks into your apartment and steals your laptop, camera, and some jewelry. You would draw on your renters insurance to pay for their replacements, up to your policy limits.
Because HO4 policies are designed primarily to cover personal property, most can cover all types of belonging: clothes, furniture, electronics, etc.
However, if you have rare and extremely valuable belongings (such as antiques, original artwork, or other high-value items), it may make sense to schedule those items. That means your high-value items get their own full-value coverage. That way, if someone steals your platinum diamond ring and a bunch of other things from your home, you won’t burn through your coverage limits with replacing just the valuable items.
The other big benefit of an HO4 renters insurance policy is its personal liability and medical payments coverage. If you’ve ever had several guests over at your place, chances are you’ve seen the potential for accidents. Perhaps your friend is really enthusiastic dancer and slips and falls in your kitchen while getting down to Lizzo. Maybe you accidentally knock your guest’s phone off your counter and it shatters. Accidents happen all the time, and when they happen in your place, you can be held responsible for the financial aftermath.
Fortunately, personal liability insurance can help pay for incidents like your friend’s medical costs or broken phone.
For minor bodily injuries visitors suffer in your apartment, medical payments coverage may be enough. It can provide a small amount of coverage for immediate medical attention, like an ambulance ride.
Unlike many other home insurance policies, HO4 doesn’t cover your dwelling or other buildings on the premises. That’s because as a renter, you don’t own the structures, and therefore it’s up to your landlord to insure these buildings.
An HO4 policy also won’t cover damage caused by incidents that aren’t explicitly listed in your policy.
Just like you can choose to insure your personal property at its replacement or actual cash value with homeowners insurance, most renters policies let you choose, too.
Here’s the main difference:
R × (E - C) / E = ACV
R = replacement cost of the item E = expected life (lifespan) of the item C = current life of the item ACV = actual cash value
If most laptops have an expected life of 5 years, your actual cash value payout comes to:
$1,200 x (5-2) / 5 = $720
In other words, you’d be paying a fair chunk out of pocket to replace your lost laptop with a new, similar laptop.