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What is Renters Insurance (HO-4)?

What is Renters Insurance (HO-4)?
Holly Johnson
Updated November 16, 2021
5 Min Read

Renters insurance, also known as HO4 insurance or tenant insurance, is a type of insurance coverage that is designed to protect individuals or families who live in a rented house or apartment. While you may be able to tailor coverage to your exact needs, most renters insurance policies come with liability coverage, coverage for your belongings and personal possessions, and coverage for alternate housing if a covered loss leaves you without a place to live.

One detail you'll quickly notice about renters insurance is that these policies do not intend to cover the building you live in or any of its components. By and large, that's what landlord insurance is for, and you're not responsible for buying landlord insurance. 

As a renter, you are only responsible for providing liability coverage and protection for your important personal belongings. Read on to learn how renters insurance works, what is and isn't covered, and how to shop for a policy.

What Does Renters Insurance Cover?

What do you get with a renters insurance policy, exactly? Generally speaking, renters insurance is set up to cover your financial losses if your personal belongings are ruined as the result of a covered peril.

Examples of covered events under a renters insurance policy include:

  • Fire
  • Lightning
  • Windstorm
  • Theft
  • Vandalism
  • Impact by a vehicle
  • Hail
  • A frozen plumbing system
  • Theft

Also note that renters insurance policies provide liability protection that can kick in if someone is injured on a property you rent. This coverage can be lifesaving for your finances if someone injured on your property begins racking up medical bills, or if you incur legal expenses as a result of the event.

Renters insurance can also provide meaningful protection if the property you're renting becomes unlivable due to a covered loss and you have to find a new place to live. With this component of your coverage, your insurance can foot the bill for a hotel room or a temporary apartment while your living situation is up in the air.

Finally, a renters insurance policy can help pay for items that are stolen or damaged while parked in your car. Of course, this type of coverage depends on the exact inclusions in your policy, so make sure to check.

What Renters Insurance Covers

Type of CoverageWhat May Be Included
Personal PropertyCosts involved in repairing or replacing your personal items and belongings, provided they were damaged during a covered event
LiabilityMedical bills and legal expenses that accrue if someone is injured on the property you rent; also covers repairs in the event you damage another person's property
Living ExpensesLiving expenses incurred if your rental becomes unlivable due to a covered reason

What Does Renter's Insurance Not Cover?

The exact inclusions of your renters insurance policy will vary, and it's possible to purchase additional coverage for items that aren't typically covered by renters insurance. With that being said, renters insurance typically excludes the following:

  • The Property Itself: Renters insurance intends to cover your personal possessions, yet the person who owns the property needs to purchase landlord coverage for their asset.
  • Home Business Equipment: Property that is used to operate a home business is traditionally not covered by landlord insurance.
  • Valuables and Collectibles: If you have expensive collectibles or antiques, you'll want to purchase an insurance rider to add these items to your policy. You can also purchase a standable collectible or antique insurance policy.
  • Automobiles: Also note that cars you own are not traditionally covered by renters insurance even if they are parked on the property you rent. However, items inside your car that are damaged or stolen may be covered depending on your policy.

How Much Does Renters Insurance Cost?

The good news about renter's insurance is the fact it costs a fraction of what you'll pay for a landlord insurance policy or homeowner's insurance policy. In fact, you may be able to secure renter's insurance for a home or apartment you rent for as little as $20 per month.

According to the National Association of Insurance Commissioners (NAIC), the average renters insurance policy ranges from $15 to $30 per month. However, policies can cost more or less depending on where the insured lives, the possessions being covered by the policy, the size of the rental unit and other factors.

How Much Renters Insurance Do You Need?

How much renters insurance you need depends on how much your personal possessions are worth, including items that would be expensive to replace such as furniture, appliances and electronics. However, you also need to take note of how much liability coverage you want to have as a renter.

Another factor to keep in mind is whether policies you're considering offer actual cash value or replacement cost. Where actual cash value coverage will reimburse you for what it costs for your item when you file a claim (minus the deductible), depreciation is factored into the equation. With replacement cost, on the other hand, you can be reimbursed for the real cost of replacing your item at today's prices.

While how much renters insurance coverage you buy is ultimately up to you, you should note that the average policy comes with around $100,000 in liability coverage and $30,000 in coverage for personal property. 

Should You Get Renter's Insurance?

If you rent a home or an apartment and you have possessions you want to protect, you should absolutely purchase a renter's insurance policy. Doing so will ensure you have financial protection in the event your rental comes into the crossfire of a natural disaster, a fire, or some other unanticipated event. 

With prices for renters insurance often coming in below $20 per month, you can buy a considerable amount of peace of mind for the price of a pizza delivery or a dinner out each month.

You should also know that, without renters insurance, you won't have any protection if the worst case scenario plays out. Also know that your landlord does not provide any coverage for your personal possessions. The individual or company that owns the building you rent has a landlords insurance policy to protect their asset, but providing coverage for your possessions and your liability risk is up to you.

How to Shop for Renter's Insurance

Shopping for a renters insurance policy is easy as pie, and you can take care of the entire process online and from the comfort of your home. If you have a homeowners insurance policy or you have auto insurance already, you may even be able to bundle your renters insurance with the same company for ultimate convenience and a multi-policy discount.

These tips can help you get the best renters insurance policy money can buy:

  • Decide how much coverage you need. Have an idea of the limits you want to purchase for your personal belongings and liability coverage. 
  • Compare renters insurance prices with at least three or four providers. Take the time to compare renters insurance quotes with at least three or four top providers. By knowing your policy limits ahead of time, you can make a true apples-to-apples comparison.
  • Decide on your deductible. Decide how much you want to pay in order to be eligible to file a claim, and know that your policy will be priced accordingly. Many renters insurance deductibles fall between $50 and $2,000.
  • Look for discounts you may be eligible for. See if you're eligible for special savings such as multi-policy discounts, senior discounts, retiree discounts, discounts for having a security alarm, non-smoker discounts, and more. 

Secure more coverage for collectibles or antiques. If you have expensive art or collectible items, see if you can purchase additional coverage for them within your renters insurance policy. If not, you may need to purchase separate coverage for high-value items you own.

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