Understanding Homeowners Insurance – 4 (HO-4)

Your home is your biggest investment. It is the most expensive purchase you’re going to make, it should protect it. Homeowners insurance is the best way to do that, but what if you’re renting? Maybe you live in an apartment complex or you rent a home. Do you need homeowners insurance? What is the best way to protect all of your belongings in case of a disaster?

The best way to protect your goods and valuables is to have an HO-4 plan, also known as a “renter’s insurance” policy. These policies are very similar to a traditional homeowners insurance policy, but obviously, the plan doesn’t cover the physical building, that would be covered under the landlord’s policy. Instead of covering the home or actual apartment, the policy will only cover the things inside of it.

HO-4 Coverage

Renter’s insurance is similar to a lot of homeowners insurance policy in what it covers, they are very similar to an HO-1 or HO-2 plan. The HO-4 plan covers your personal belongings from 17 different disasters. Just like most homeowners insurance, most renters’ policies don’t cover damages from either earthquakes or floods.

  • Vandalism
  • Theft
  • Fire/smoke damage
  • Explosion
  • Water damage from utilities
  • Damages from the weight of snow or ice
  • Damage from vehicles (or aircraft)
  • Damage from riots
  • Wind, hail, and lightening

These are only a few of the things that are covered under the policy. Some other natural disasters are covered.

There are a few unique factors to a renter’s insurance policy that you should be aware. The first is the unlivable conditions clause, which is something that a lot of policyholders are unaware of.

If the place you are renter ever becomes unlivable for whatever reason that is covered under your policy, the plan will pay for additional living expenses. Typically that could mean that they will pay for you to live somewhere else until your home is fixed and you can return to your normal renting situation.

What to know when buying a renter’s insurance policy

Imagine that if you came back to your home to see that everything was destroyed or stolen, would you be able to replace everything? Probably not. Even if you haven’t realized it, you probably have more stuff in your apartment that would be difficult to replace. This is where a renter’s policy can help.

These policies are much more affordable than most people would think. The average annual premium for renter’s insurance is under $200. This seems like a small price to pay the peace of mind and coverage that it will bring.

Aside from what is covered, you should also understand some of the limitations of the policy. As we mentioned early, if you want coverage from natural disasters like floods, earthquakes, landslides, or hurricanes you will have to purchase an additional rider to the policy, which will cause your monthly premiums to go up. Depending on where you live, one of these riders could be a smart investment.

How much renter’s insurance you need

If you decide you want to purchase a renter’s insurance plan, the next thing you will have to decide is how large a policy you’re going to buy. The best way to determine how much you need is to take inventory of all the things that you own. One of the worst mistakes that you can make is to not buy enough renter’s insurance. You could find yourself in the middle of a disaster and only able to replace a portion of your belongings.

Before you purchase a policy go through every room and write down what you have in there. It will help to also take pictures of your belongings. After you go through every room, you’ll have a rough idea of how much coverage you need to purchase. Sure, it will probably take a couple of hours, but it will be well worth it if you ever need the file a claim.

Taking pictures and itemizing all of your stuff will benefit you several different ways. The first is it gives you a firm starting point for how much coverage you should buy. The second reason is that if anything tragic were to happen to your home, you would have detailed records of what you lost. A lot of people are surprised about some of the things that they have or have forgotten some things. Especially if you ever experience a fire or theft, with the emotional strain it can be hard to recount all of your belongings.

Coverage Limits

One factor that most policyholders don’t know is that the majority of plans have coverage limits for each category of insured property. For example, your policy might cover $50,000, but the plan could have a limit for $5,000 for jewelry. If you want additional coverage, you will have to buy a separate rider. You plan could have limits for things like electronics, art, musical instruments, etc. Each company has different amounts, and you will have to talk to your agent to see if your plan will provide enough coverage.

Renter’s Insurance

Having insurance is one of the most important things you can buy for you and your family. A lot of people skip renter’s insurance or typically won’t buy a plan until they buy a house, but this could be a drastic mistake. Sure, you don’t own the building that you live in, but losing everything inside of it would be just as devastating. Because these policies tend to be so affordable, you can’t afford not to have one.

At Longevity Brokers, HO-4 policies are just a few of the different insurance plans that we are pleased to offer to the Denver, Colorado community. If you have any questions about renter’s insurance or any insurance plan, we would be happy to talk with you today. You can call us at (720) 209-4598 or use our contact form.

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