An HO-4 insurance plan covers renters and their possessions up to policy limits but does not insure homes or their contents. Although affordable, most renters go without the inexpensive coverage, which typically costs between $10 and $20 per month.
An HO-4 insurance policy provides liability coverage as well as insurance for personal belongings, even when away from the rental unit. If a bicycle were stolen while in use away from the home, it would be covered.
Renters policies are very affordable, often running no more than $100 or so per year and many times much less. But many who forego coverage make the mistake of thinking a landlord's insurance policy will cover their loss, which it won't.
Many people also go without an HO-4 insurance plan under the assumption they either cannot afford it or because they don't think they have enough things to insure. But even common furnishings can cost a great deal to replace. Others might think the apartment building in which they live is secure against common perils. But even a well-built apartment can be impacted by a wide variety of dangers, such as a ruptured gas line.
If an emergency forces a temporary relocation, a renters coverage policy would help pay for the costs of temporarily relocation to a hotel or motel while the matter is handled. Power outages also can cause damages, such as to food supplies.
While an HO-4 insurance policy will protect their belongings, many do not realize the extent to which liability coverage might help. The liability portion of renters insurance policies will protect not just against liability for injuries or deaths caused to visitors inside the apartment but also can pay for damages to the apartment for which a landlord attempts to hold the renter financially responsible.
The insurance policies typically come in two types. One pays claims based on the actual cash value for items that are damaged, destroyed or stolen from an apartment or while away from the premises. Actual cash value policies take into account depreciation and market value of items when paying claims. Such policies generally are very affordable, and the rates can be lowered by increasing the deductible amount.
The second type of renters insurance is a replacement cost policy, which will pay up to policy limits to repair or replace damaged, destroyed or stolen items. Such policies cost more than their counterparts but can be well worth it for many people.
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