An HO-4 policy is made for people that are renting the structure the live in versus owning it. It’s known as retner’s insurance or the tenant’s homeowner’s policy and includes broad contents coverage with the option to purchase special form insurance. The biggest difference between this form of insurance and the ones that precede it is that the first three forms are intended for homeowners. At some point, someone decided that even though renters didn’t own their structure, their belonging needed protection and they needed some form of personal liability protection as well. Enter the HO-4 form. This will also cover any additional living expenses should your rental unit experience damage.
Just because you don’t own a physical property doesn’t mean that the belonging you have are of no worth. There are various reasons that people rent instead of own. Some just like the flexibility and don’t want the responsibility and added cost of owning a home. When you rent a unit and your oven breaks, all you do is call the landlord. If you own a home and your oven breaks, you might have to pay for a new oven. But accidents don’t discriminate when it comes to homeowner’s and renter’s so you need to make sure you have coverage.
Many people buy it to protect their property against theft but there are other things that can occur which leave your belongings vulnerable. If your building is damaged in a tornado and you need to live somewhere else while its repaired, you can file your loss of belongings as well as your additional living expenses under your HO-4 policy since wind is considered a covered cause of loss.
Just make sure that you attribute the appropriate amount of value to your belonging. One of the biggest mistakes you can make is under-insuring your property. While you’re sitting in the insurance office, $20,000 sounds like a lot of coverage for not a lot of money but if something truly disastrous happens that’s covered under your policy and you lose everything, you will find that money starts to disappear quickly.
The only way to get a true estimate of your personal property worth is to take an inventory of the valuable major items in your home. Big furniture like sofas and kitchen tables, beds and dressers are prime examples of things that can be very costly to replace. Don’t forget about all your electronic items either. Typically with furniture, the larger the item the more value it holds but electronics does not discriminate when it comes to size: value ratio. Things like your iPod, speakers, computers, televisions, gaming systems electronic cookware, and tablets needs to be inventories and assigned a value then placed somewhere for safekeeping. When you start adding up just your electronic items, you will find that the $20,000 coverage starts disappearing fast. If you have any other valuable jewelry, art, or antiques, be sure to list those as well.
Then estimate how much it would cost to replace all of those items. You want to use replacement cost versus how much you paid for them because if everything is totaled, that’s what you will be doing. When you develop a final estimate of your belongings’ worth, double that number. That’s what you should insure your contents for. Why so much? If you have a total loss of everything in your home due to a fire, you will have to start over brand new. This means buying new dishes, new towels, new clothes and things you might not even think of like pens and pencils. We normally don’t think about how much we accumulate until we have nothing left at all.
Another area that requires a careful look is your personal liability limits. This is one of the biggest advantages of an HO-4 policy because it protects your from various lawsuits. The standard policy is going to start at $100,000 but for a minimal fee, you can up it anywhere from $300,000 to $500,000 which will provide a very good amount of coverage.
Just because you rent your dwelling doesn’t meant that you shouldn’t be covered under some type of homeowner’s insurance. This is precisely why HO-4 policies were developed and they are extremely affordable. There really isn’t a reason for not having renter’s insurance so make sure you take the extra step to protect your belonging today. If something happens to your rental unit at any time, you will be very happy that you made the initial investment.