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What is an HO-4 insurance policy?

Fact-checked with HomeInsurance.com

People who rent apartments and homes need the protection that only an HO-4 insurance policy can provide. Commonly called renters insurance, an HO-4 policy can help protect you against the high cost of lawsuits, replace your personal belongings if lost to damage or theft and help pay your expenses if a disaster displaces you from your home. 

Most landlords require tenants purchase renters insurance, which major property insurance companies typically offer at a very affordable price. Before buying an HO-4 policy, it’s important to know what it covers, what it doesn’t cover and the amount of protection you need.

What is HO-4 insurance?

If you rent an apartment or house, your landlord’s insurance policy only covers the structure — a renters insurance policy is what protects your personal belongings. An HO-4 renters policy provides “named perils” coverage, which means the terms of the policy define the type of calamities it will cover. The term “peril” refers to the type of force or incident that causes a loss. 

HO-1, HO-2 and HO-3 homeowners insurance policies provide protection for people who own their homes. HO-2 and HO-3 policies cover losses caused by 16 perils, including:

  • Accidental overflow of water or steam
  • Accidental and sudden burning, cracking or tearing apart of home systems
  • Aircraft
  • Civil unrest and riots
  • Explosions
  • Falling objects
  • Fire and lightning
  • Freezing
  • Hail and windstorms
  • Power surges
  • Smoke
  • Theft
  • Vandalism
  • Vehicles
  • Volcanic eruptions
  • Weight of ice, sleet and snow

An HO-4 policy covers the same 16 perils as HO-2 and HO-3 policies as it pertains to your personal property. So, if your personal belongings are stolen in a burglary, or destroyed by a fire or windstorm, your renters insurance policy should pay for your losses. Likewise, if your rental home’s hot water tank suddenly ruptures, and water destroys a sofa or oriental rug, you could file a renters insurance claim to help pay the cost of replacing your property.

Who needs HO-4 insurance?

Anyone who rents an apartment, condominium or home needs renters insurance. Landlords require tenants to carry renters insurance to relieve them of liability for personal property losses. More importantly, a renters policy reduces the amount of legal liability a landlord must shoulder if a guest is injured in a tenant’s home.

College students living in dorms and people who rent rooms in homes may also need renters insurance. In some cases, a parent’s homeowners insurance may protect the belongings of a student living in a dorm. Even so, renters insurance is a fairly cheap added protection — oftentimes less than $20 per month. 

Rather than relying on their parents’ home insurance coverage, students can receive better coverage by purchasing a renters policy, because they can adjust limits for personal items such as computer and electronic equipment.

Renters who share an apartment or home with roommates must decide if they need a separate renters policy or one that covers everyone in the household. Typically, it’s best to purchase separate policies. Adding several people to a single policy can increase the premium, because it increases the insurer’s risk. Rates are also based on each individual’s risk profile, which can be higher or lower among individuals and would impact the joint policy premium.

What does HO-4 insurance cover?

Most standard HO-4 policies include three types of coverages:

Additional living expenses

Additional living expenses coverage can help pay for temporary accommodation and meals when you’re displaced from your home following a covered loss. In most cases, additional living expenses coverage reimburses you for costs that exceed your normal living expenses. For example, if you pay $1,500 per month for rent, and an extended-stay hotel costs $3,000 per month, you can file an additional living expenses claim for $1,500 (minus your deductible from the final payout amount). 

Personal liability

If a visitor or guest slips and falls in your home, personal liability coverage can help pay for any incurred medical bills. Personal liability coverage can also help pay your legal expenses, including attorney fees and court costs, if someone sues you over an injury that occurs in your rental unit. 

Insurers typically offer default liability limits ranging from $100,000 to $300,000, which often includes $1,000 to $5,000 in medical payments coverage. If you need more coverage, speak with your provider about raising limits. Most carriers also offer personal umbrella policies, which cover liability costs that exceed your renters insurance limit.

Personal property

When a covered peril damages or destroys your personal belongings, your personal property coverage can help pay to replace them. Personal property coverage can help pay for possessions such as clothing, electronics and furniture. 

Insurers do set limits on certain types of property. For instance, a provider may only pay up to $2,500 for computer equipment or $1,500 for sports equipment. However, most carriers will allow you to increase limits. For expensive items, like jewelry and musical instruments, you may need to add a rider or endorsement for added protection.

What does HO-4 insurance not cover?

Standard renters insurance policies provide basic protection. Most providers offer optional coverages and allow you to increase limits. Even so, HO-4 policies won’t cover the following:

Earthquake and flood damage

Most renters insurance policies don’t cover losses caused by earthquakes and floods. However, policies for these can often be purchased separately. While earthquake and flood insurance are optional coverages, they’re important to carry if you live in an area prone to these types of disasters.

Structural damage

Homeowners policies include dwelling and other structures coverage to pay for structural damage to the home or unattached structures, but HO-4 policies don’t as they pertain solely to the belongings of the policyholder. 

If a covered peril destroys your rental unit, the landlord’s property insurance must pay for repairs. Some renters policies provide a certain amount of coverage to pay for changes you’ve made to your rental home. For example, if you installed designer wallpaper in your dining room, your renters insurance may help you replace it following a covered loss. 

Your medical expenses

The personal liability coverage of an HO-4 policy will help pay medical expenses if someone outside your household sustains an injury in your apartment, but it won’t pay your personal medical bills. If you tumble down the stairs, you’ll need to rely on your health insurance or separate medical coverage to cover the costs.

How much HO-4 insurance do I need?

Obtaining a renters insurance quote online is fairly easy with most major insurers. Quote applications usually set default limits for personal liability and personal property coverages. For example, you may receive a quote that provides $25,000 in personal property coverage and $300,000 in personal liability coverage. 

Carefully consider the amount of coverage you need before purchasing a policy. Determining the amount of personal property coverage you need requires just a few simple steps:

  • Take an inventory of your personal property.
  • Determine how much it would cost to replace each item.
  • Add all costs to determine the amount of personal property coverage you need.

Determining the amount of personal liability coverage you need may depend on your lifestyle. If you have kids who enjoy inviting friends over for playdates or slumber parties, you may need to increase your liability coverage to protect you against potential accidents. Likewise, if you enjoy hosting guests for cookouts or pool parties, you likely need more liability protection.

Choosing an HO-4 insurance policy

Most standard HO-4 policies pay the depreciated value of your personal property. For instance, if you buy a sofa for $1,000 and it’s destroyed in a fire five years later, the insurer will likely only pay you a few hundred dollars to replace it. 

However, providers typically offer optional replacement cost coverage, which pays to replace your personal belongings at current market prices. Adding replacement cost coverage will increase your premium, but it means you pay far less to replace any damaged or stolen items down the road.

When shopping for renters insurance, consider your unique needs. If you travel often, look for a policy that protects your personal belongings when you’re staying in a hotel. Folks who work from home also need to consider the amount of coverage a renters insurance policy provides for items such as expensive electronic equipment.

Also consider the optional coverages offered by your insurer. Optional coverages can include additional protection for computers and smart devices, identity theft protection and scheduled personal property coverage for your most valuable belongings, like artwork and collectibles. Many optional coverages don’t significantly increase your rate and they’re worth the extra cost for your high-value items.

The takeaway

  • HO-4 insurance policies cover the same perils as most homeowners policies.
  • Standard renters policies include additional living expenses, personal liability and personal property coverages.
  • HO-4 policies don’t include dwelling and other structures coverages.
  • Insurers allow you to increase renters insurance limits and offer optional coverages for valuable items.
  • HO-4 policies are affordable and a must for anyone who rents an apartment, condo or home.

Depending on where you live and the amount of coverage you need, you can often buy a renters insurance policy for $20 per month or less. An HO-4 policy covers losses to possessions caused by the same types of disasters as most home insurance policies, perils such as fire, hailstorms and vandalism. 

Standard HO-4 policies provide liability protection, pay to replace your personal belongings and help pay your living expenses if you need to move out of your rental home following a covered loss. 

Typically, policy limits can be increased to suit your needs and many providers sell umbrella policies to boost your liability or high-value item protections.

Michael Evans

Michael is an insurance writer for Coverage.com. He began writing professionally in the 1990s while working for the world’s first online mortgage broker, and today specializes in education, finance and retiring abroad. Michael has contributed to numerous digital and print publications, including Bankrate, Fox Business, International Living and Yahoo Finance, and is the author of Escape to Colombia, 1st Edition, a comprehensive guide to retiring to Colombia.

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