Insurance works best when you understand it.
Let’s take a closer look at personal property insurance to better understand your policy.
When most people think of “home insurance,” they think of the coverage that protects the roof over their head and the walls that surround them. But there are a lot of other things that homeowners insurance covers.
There are actually multiple types of coverage that make up a single home insurance policy:
Coverage A: Dwelling
Coverage B: Other Structures
Coverage C: Personal Property
Coverage D: Loss of Use
Coverage E: Personal Liability
Coverage F: Medical Payments to Others
In this article, we’re going to take a look at Coverage C: Personal Property Insurance.
What Is Personal Property Insurance?
If disaster struck right now, could you afford to replace everything you own? Probably not. Thankfully, that’s where Coverage C: Personal Property Insurance comes in.
Coverage C is part of most standard homeowners insurance, condo, and renters insurance policies, and its purpose is to repair or replace your personal belongings after a covered loss.
Unlike Coverages A and B—which protect the physical structure of your home and detached buildings—Coverage C provides protection for the things that would fall out if you took the roof off, turned your home upside down, and gave it a good shake.
What Does Personal Property Insurance Cover?
Your personal property isn’t just the stuff you use to cook dinner, take care of your kids and pets, or do projects around the house. It’s also the stuff that makes your life more enjoyable, such as your favorite piece of artwork, your daughter’s crafting supplies, or your PS5.
Generally speaking, personal property insurance provides coverage for things like:
Furniture
Appliances
Clothing
Books
Electronics
Jewelry
Home Décor
Sports Equipment
Photos or Videos
And Much More
Items that are typically not covered include pets, business data, credit cards, vehicles (such as cars, aircraft, and boats), or property in a room or building that you rent out.
As with any other insurance policy, personal property insurance has coverage limits. Typically, these are around 50% of your dwelling coverage. For example, if your dwelling is covered up to $250,000, your personal property would be covered up to $125,000.
However, some items—such as cash/gift cards, jewelry/watches/gemstones, expensive furs, fine art, firearms, gold, etc.—will have sub-limits that are much less than your standard coverage limit (typically around $1,500).
If you want additional protection, consider getting scheduled personal property coverage (also known as an endorsement, floater, or rider) to increase your coverage limit of these items.
What Am I Covered Against?
The exact risks that you are covered against will depend on the type of home insurance policy you have.
Certain policies may or may not include Personal Property Replacement Cost (new for old). Instead, they could have Actual Cash Value (depreciation applied) loss settlement; we never recommend this.
As well, your policy could be written on what’s called BASIC, BROAD, or SPECIAL Form. The difference between the three amounts to what perils (bad stuff) is covered. As you can imagine, BASIC covers a very short list of specific things. BROAD covers a little more than BASIC. SPECIAL covers everything except the policy’s list of exclusions.
In most cases, Coverage C protects your belongings against risks such as:
Fire
Lightning
Windstorm/Hail
Explosion
Riot or Civil Commotion
Falling Objects (such as trees or meteors)
Vehicles
Smoke
Vandalism
Theft (including theft outside the home)
Notice that flood damage is not on this list. In Florida, you will need a separate flood insurance policy to protect your dwelling or personal property from flood damage.
At the end of the day, insurance policies are just like homes: no two are alike! Talk to your independent insurance agent to understand exactly what you are covered against.
How Much Coverage Do I Need?
If you’re a numbers person (or a good Price is Right contestant!), you may be wondering whether your coverage limit is enough to replace every single thing in your home.
Here are three questions to help you decide the amount of coverage you need.
1. How much do you own?
It may sound tedious, but documenting your personal property may be the only way you’ll know whether you’re fully protected. Think about it: if your home burned down tomorrow, would you really remember every single item you own?
Your inventory list should be more than a list of items, however. Make note of their condition as well.
To make this process easier, whip out your cell phone and take photos or video of your belongings for an accurate snapshot.
2. What will it cost to replace my belongings?
Depending on your policy, your insurance company will calculate the value of your claim in one of two ways. Either it will reimburse you for the Actual Cash Value (ACV) or Replacement Cost Value (RCV) of your items.
The ACV is the value of the item at the time of the loss, whereas the RCV is the amount required to purchase an exact replacement of the item you lost. In short, ACV pays less because it factors in the item’s depreciation.
Now, neither of these is a “bad” option. However, you may end up paying higher premiums in exchange for a RCV policy. This is something you’ll want to discuss with your agent.
3. What is my existing coverage limit?
Compare the value of your personal belongings (as well as the cost of replacing them) against your current coverage limit. If your insurance is not enough to fully replace everything you own, you will have to pay out of your own pocket.
Conclusion
Your personal property is what makes your house feel like a home. Safeguard your belongings by making sure that you have sufficient coverage to put your mind at ease.
At Harry Levine Insurance, we believe that insurance works best when you can understand it and make informed decisions that work best for you. That’s why we take the time to discuss your needs and provide customized solutions that match your needs.
Contact us today or visit our website for a free quote.
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