What Is HO-4 Insurance? | 2023

HO-4 insurance is another term for renters insurance. It covers the policyholder’s personal belongings but not the physical structure of the rental home. Most HO-4 policies also include personal liability protection and cover additional living expenses if renters are temporarily displaced from their homes.

Below, the Guides Home Team explains everything you need to know about renters insurance.

An HO-4 insurance policy includes three types of coverage:

• Personal property: This covers belongings that are damaged or destroyed by a covered peril. It also covers theft, including items stolen from your vehicle or hotel room.
• Personal liability: This covers property damage or bodily injury for which you might be held liable. For instance, if someone trips and falls in your rental home, your personal liability coverage would pay for their medical bills and your legal expenses.
• Additional living expenses: Also known as loss of use coverage, this covers the extra expenses you might incur if your rental home is rendered uninhabitable for a period of time, such as after a natural disaster. It provides reimbursement for extra expenses, such as a hotel stay and restaurant meals, until your home is repaired or rebuilt.

What counts as a covered event may differ from one insurance company or HO-4 policy to another. Most policies cover the following 16 named perils:

• Damage by aircraft
• Damage by vehicles
• Explosions
• Falling objects
• Fire or lightning
• Freezing of home systems
• Riots or civil commotions
• Smoke or ash
• Sudden or accidental power surges
• Sudden or accidental tearing, cracking, burning or bulging of home systems
• Theft
• Vandalism or malicious mischief
• Volcanic eruptions
• Water or steam discharge from home systems and appliances
• Weight of ice, sleet or snow
• Windstorms or hail

Your renters policy documents should list which events are covered or excluded. Policies also differ in their coverage limits, which denote the maximum amount the company will pay for different types of claims.

Further, renters insurance policies can be sorted into two categories based on how they calculate the value of your belongings and, by extension, your payout when you file a claim. Some policies will only reimburse you for how much your belongings were actually worth. This is known as the actual cash value (ACV) and accounts for value depreciation. Other policies will reimburse you for the full replacement cost up to your policy limits.

The most significant thing that HO-4 insurance coverage excludes is damage to the building itself. The physical structure of your rental home falls under your landlord’s insurance, which would be a DP-1, DP-2 or DP-3 policy. Your landlord is also responsible for insuring items he provides in the rental property, such as the air conditioning and appliances.

Renters insurance generally does not cover accidental loss or damage, regardless of whether you or another person is to blame. It may also exclude specific natural disasters. For instance, most policies do not cover damage caused by the following:

• Earthquakes
• Floods
• Landslides
• Nuclear hazards
• Sinkholes

To learn more about your policy exclusions, contact your insurance agent or review your policy documents. You should also be aware of your coverage limits and deductible, as these will affect any potential payouts. High-value items, such as jewelry and collectibles, may not be fully covered by a standard policy. However, you can address this issue with an add-on, such as a scheduled personal property rider or endorsement.

As a general rule, anyone who lives in a building they do not own can benefit from renters insurance. Renters insurance provides liability protection and personal property coverage for people living in the following residences:

• Apartments
• Dorm rooms
• Leased condos or townhouses
• Leased single-family homes
• Multi-family rentals

Renters insurance can be a wise investment even if you do not have an official landlord. For instance, if you move into a home owned by a family member, you may not think of that person as your landlord. However, should a natural disaster or other named peril strike, the homeowners insurance may not cover your belongings.

There isn’t a specific value threshold for purchasing renters insurance; it’s typically worthwhile regardless of how much stuff you own. Remember that insurance is about planning for the worst-case scenario. If a fire destroys your home, the cost to replace all your belongings will add up quickly — not to mention the additional living expenses you will face while the home is rebuilt.

HO-3 coverage is a type of homeowners insurance. Although it has a few similarities to the coverage offered by an HO-4 policy, the differences are significant. The first and most obvious difference is that HO-4 policies cover renters, whereas HO-3 policies cover homeowners.

The second difference is a bit more complicated. There are three main types of standard home insurance: HO-1, HO-2 and HO-3. Of these, HO-2 insurance is the most similar to HO-4 coverage because both cover the same 16 named perils. HO-1 policies also provide named perils insurance but only cover 10 things.

HO-3 policies are different. They often include open perils coverage for your home and named perils coverage for your belongings, with the option of upgrading to open perils coverage for both. With an open perils policy, home insurance covers any peril not listed as an exclusion in the policy documents. 

Because HO-3 policies provide more generous home insurance coverage, they tend to be more popular than HO-1 or HO-2 policies.

HO-6 coverage is condo insurance. This type of policy is also known as “walls-in” coverage because it covers everything from the walls in. In other words, it will cover the walls, floor and ceiling of your individual unit as well as everything inside it — but not any exterior walls or common areas. Those would be covered by a separate policy, typically one held by the condo association.

HO-4 and HO-6 insurance are similar in that they both provide limited coverage for a dwelling. Condo insurance is broader than renters insurance, though, as it covers certain structural elements that renters insurance excludes. Both policies typically provide named perils coverage, too.

Ultimately, which type of policy you purchase depends on your living situation. If you live in a condo you purchased, you should get HO-6 condo insurance. If you live in a rented unit, you should get renters insurance.

Don’t let the abbreviation throw you off — HO-4 insurance is simply renters insurance by another name. In most cases, renters insurance provides affordable coverage for your belongings plus personal liability and loss of use protection. Renters insurance will not cover the structure of your rental home, however.

Before purchasing renters insurance, shop around. Requesting and comparing quotes from at least three providers will help you find the best deal.