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HO4 Renter Insurance Policy
The HO4 insurance policy is most commonly referred to as renters insurance. Whether you rent a home, condo, townhome, or apartment, if you purchased insurance, you most likely have HO-4 insurance. Regardless how it's spelled (HO4, HO 4, HO-4, H04) it always means the same thing - insurance for people who rent.
The HO4 is a Named Perils Policy
The HO-4 is a named perils policy. There are two categories of insurance policies; named perils and open perils. A named perils policy specifically lists the perils the policy insures. If damage is the result of a peril that is not listed on the policy, the HO 4 insurance policy will not insure the damage.
HO4 Insurance Policy Perils
The standard HO 4 insures 16 specific perils. Those perils are the following:
- Fire or Lightning
- Windstorm or Hail
- Riot or Civil Commotion
- Vandalism or Malicious Mischief
- Volcanic Eruption
- Falling Object
- Weight of Ice, Snow, or Sleet
- Accidental Discharge or Overflow of Water or Steam
- Sudden & Accidental Tearing Apart, Cracking, Burning or Building
- Sudden & Accidental Damage from Artificially Generated Electrical Current
The HO4 Covers Personal Property
The main purpose of the HO4 policy is to insure the belongings of the person who purchased the policy. Personal Property coverage on the HO-4 is broad; it should extend to all of the belongings a person owns. If your HO 4 policy says you have $50,000 in coverage, it most likely means that you have a maximum of $50,000 that can be used towards replacing damaged or stolen belongings.
In addition to Personal Property, most HO4 renters insurance policies will give the renter Liability insurance and Medical Payments to Others insurance. Liability insurance provides extra protection for legal situations the insured may find himself or herself in, and Medical Payments provides a small amount of insurance for minor accidents that occur on the property to people who don't live on the premises.
The HO4 Does NOT Cover the Dwelling or Loss of Use
The main difference between the HO4 and most other standard HO policies. (The home insurance policies are HO2 HO3 HO5 and HO8. The condo insurance policy is the HO6.) is the fact that the HO 4 does not provide any coverage for the Dwelling (actual structure) or Other structures (other buildings on the property). If an insured has the HO4 insurance policy, by default she does not own the place she resides, and thus she is not responsible for repairing any buildings or structures if they get damaged by any of the perils mentioned above.
In addition, the owner of the HO-4 insurance policy does not have any Loss of Use coverage, which under a standard HO policy is used to pay for a hotel while the dwelling gets repaired from a covered peril.
HO4 Renters Insurance Can Be Actual Cash Value or Replacement Cost
HO4 renters insurance can be written as an actual cash value policy or a replacement cost policy. As the owner of the policy, you need to be very aware of which type of policy you have, because there could be a huge distinction in how much money you receive for a claim.
Actual cash value policies are policies that deduct depreciation from the amount you receive for your insurance claim. Depreciation increases as property gets older. If you bought a TV 4 years ago for $1,000, the depreciation on that TV may be in excess of $500. That means the insurance company would only give you $500 (or less) to buy a replacement TV!
On the other hand, a replacement cost policy is a policy that does not deduct depreciation from the amount you receive for your insurance claim. In the same example as above, if your 4-year-old TV that you bought for $1,000 gets stolen, you should receive a full $1,000 to spend toward a new TV.