0 HO4 Insurance - What is renters insurance?

Just because you rent a home, it doesn't mean you don't need insurance.  After a lifetime of buying clothes, furniture, and other belongings, a house fire can take everything from you.  Some people think that the landlord has insurance to replace these things in the event of a devastating loss like a house fire, but the dwelling fire policy covering the home will not pay for your loss. 

To take care of your possessions in the event of a loss, you need what is known as HO4 insurance, also called a renter's insurance policy. This policy provides similar coverage as the HO3 insurance policy, or homeowners policy, without the coverage for the building.

The first section of the HO4 insurance policy is called the personal property section.  This provides money to repair or replace your belongings.  This coverage is available in either Actual Cash Value or Replacement valuation.  The ACV pays for the depreciated cost of what you lose, where the replacement policy does just what it says; it pays you money to replace what you lose.

The second section of the HO4 insurance policy is called the Liability Coverage section.  This part provides money to pay legal damages in the event he or she is found liable in a lawsuit. Some may believe they may never get sued, but if you have a visitor that gets hurt while in your residence, it could happen. We have all heard stories about a family pet who decides to bite a person who may be visiting.  If this happens to you, you'll sleep better knowing you have insurance to cover this.

Another part of the liability section of the HO4 insurance policy provides money to pay medical expenses in the event someone gets hurt while at the home you are renting, but decides not to sue.  This part is called Medical Payments to Others and pays reasonable medical costs to someone also hurt at your residence. An example would be a visitor who falls off the porch and breaks an arm.  The Medical Payments to Others clause could provide money to pay their medical expenses up to a purchased limit.

When considering an HO4 insurance policy, first add up what possessions you own and calculate a replacement value.  Use this number for the Personal Property limit. Also decide on whether you want ACV or replacement cost.  The ACV will be less expensive, but you may have to make up some of the cost of replacing your items out of your pocket.

Next, decide on the deductible to buy, which the amount of money you would have to pay first before the insurance policy would pay.  The rule of thumb is the lower the deductible, the higher the premium.

Lastly, as with all insurance, it pays to shop around.  Go to one of the online insurance quoting sites and run some quotes to get a feel for how much premium you are looking at.  Then if you would like, take your quote to a local insurance agent to see if you can get a better price.  Renting a home can be easy, but be prepared.  Get a good HO4 insurance policy take care of those things in life that happen to everyone.