Whether you live in a home, condo or apartment, everyone values their possessions. They can make us feel comfortable and safe. This is why standard homeowners insurance policies include Personal Property coverage.
What is personal property coverage
You may be wondering, “What is personal property in home insurance?” Personal Property coverage pays to replace your belongings if they’re damaged or stolen due to a covered event, such as fire and theft. Also known as Coverage C, Personal Property is a standard coverage within your homeowners insurance, condo insurance or renters insurance policy.
Here’s a list of common personal items that people file home insurance claims for:
- Furniture
- Appliances
- Televisions
- Computers
- Electronics
- Clothing
- Bicycles
- Musical instruments
What is not covered
Personal Property coverage is important, but it won’t protect you in every situation. For instance, it won’t help you if:
- Your possessions are damaged by a flood or earthquake — If you want protection from these natural disasters, you should consider buying a separate flood insurance policy and earthquake insurance policy. You rent out part of your home – Your homeowners insurance policy won’t cover the tenant’s personal property. They’ll need to purchase a renters insurance policy to cover their possessions.
- Your home is under construction – Personal Property coverage doesn’t apply to structures that are unoccupied or not fully built.
Standard home policy coverages
As noted above, Personal Property coverage is typically included with your homeowners insurance policy. This means that it’s not itemized as a separate cost that you can accept or decline. Here are the coverages that come with a typical home policy:
- Dwelling – Covers damages to the physical structure of your home. It’s used to repair or rebuild a home if it’s damaged by a covered event, such as a fire or severe storm.
- Other structures – Pays to repair or replace structures on your property that are disconnected from the main house, such as a garage, fence or shed.
- Personal property – Covers the cost of personal property damage or theft. Applies to possessions inside and outside of the home, such as furniture, clothing and computers.
- Additional living expenses (or loss of use) – Reimburses you for lodging, meals and other related expenses if you need to vacate your home due to severe damage.
- Personal liability – Protects you if you’re legally responsible for property damage or injuries to others. It may help pay for legal expenses, medical bills and other costs.
Scheduling your personal property
Most home insurance policies place a dollar limit on coverage for the value of a single personal item. These are called sub-limits. However, certain high-value items, such as jewelry and furs, may be worth more than their sub-limit amount.
The good news is that you can purchase additional coverage to cover expensive personal items to their full value. Buying this extra coverage is called scheduling your property. It’s also known as adding an endorsement or rider.
- Jewelry
- Furs
- Fine art and antiques
- Stamps and other collectibles
- Firearms
Scheduling personal property requires that you tell the insurance company up front about each individual item and what you paid for it. This will make the claim settlement process go a lot more smoothly.
EXAMPLE
| If you DON’T schedule a $10,000 watch | If you DO schedule a $10,000 watch |
| Your insurer will only reimburse you up to the sub-limits on your policy, which may only be $1,500 for jewelry. | You’ll be reimbursed the scheduled amount of the watch for covered claims. This is usually the replacement cost value (as opposed to the actual cash value). |
Should I schedule each piece of jewelry individually or collectively?
The best way to protect your valuable jewelry is to individually schedule each item. This way, if they’re damaged in a fire, your homeowners insurance carrier already knows the pieces of jewelry you own and the years they were bought.
Another option is to purchase blanket coverage for your jewelry collection. Blanket coverage is an endorsement that covers multiple pieces of personal property from the same category, such as jewelry, fine art or silverware. With this type of coverage, you don’t need to provide details on each item up front.
How personal property coverage works
If your personal property is damaged or stolen, you need to file a claim with your homeowners insurance carrier. When you file the claim, be sure to include the following:
- Photos or videos of the items
- A detailed list by room of the items and, if possible, their brand, manufacturer, model number, age and condition
- Any documents that prove the value of the items
The claims adjuster from your home insurance company will then assess your claim and determine a payment amount.
Actual cash value vs. replacement cost value
How much your home insurance company pays to replace your damaged or stolen personal items depends on whether your policy provides for actual cash value or replacement cost value. Here’s a quick explanation of the difference:
- Actual cash value – Pays you what the item is worth at the time of the loss (i.e., its depreciated value). It factors in age and wear and tear.
- Replacement cost value – Pays you to replace the item with a new, similar item, without considering age and wear and tear.
Let’s say a fire destroys your leather couch, which you purchased for $2,000 three years ago. With actual cash value, you could receive what your sofa is worth today—which may only be $1,400 due to depreciation. With replacement cost value, you could receive enough to buy a new sofa with the same basic specs. In this case, that may be $2,200 due to inflation.
Should I get actual cash value or replacement cost value?
You should always consider the coverage that is best for your particular situation. Generally speaking, though, replacement cost coverage is a better option because it will reimburse you for the cost to buy new items similar to those you lost. By contrast, actual cash value will reimburse you based on the depreciated value of your belongings. Bear in mind that replacement cost value will cost you a few extra dollars a year.
How much coverage do you need
How do you know if you have enough Personal Property coverage? As a homeowner, you want enough coverage to replace all your personal belongings if your home was completely destroyed. To figure out the approximate value of your belongings, create an inventory of everything you have in your home. These tips will help you:
| Make a List |
| Write down how much you bought each item for, the year you bought it and any serial numbers (e.g., on appliances). |
| Document Items |
| If possible, take pictures of the items and store them electronically. You should also keep original receipts. |
| Store It in the Cloud |
| Laptops can be stolen, so try keeping your list in a cloud-based digital folder that can be accessed from more than one device. |
Typical coverage amount
Most policies offer Personal Property coverage that is between 50% and 75% of your home’s Dwelling coverage (also known as Coverage A) amount. Therefore, if you have $300,000 of Dwelling coverage, you should have between $150,000 and $225,000 of coverage for your personal belongings. Remember, you can always increase that coverage if you want.
Check the declarations page of your home insurance policy to confirm your exact Personal Property coverage amount.
Covered perils
Personal Property coverage will pay to repair or replace your belongings as long as the damage or loss occurred because of a problem covered by the policy. These causes are known as named perils and vary by state. Here are the perils that are typically covered by a standard home insurance policy:
- Explosion
- Falling objects
- Fire
- Hail
- Lightning
- Smoke damage
- Theft
- Vandalism
- Weight of ice, snow or sleet
- Wind
For example, if high winds cause a tree to smash through your roof and rain soaks everything in your room, Personal Property coverage could pay to repair or replace your damaged items.
Or, if a burglar breaks into your car and steals your laptop, your Personal Property coverage could cover the cost to buy a new one.
Open-peril policies
If you’re looking for more coverage, an open-peril policy (also known as an HO-5 home insurance policy) has broader protection for personal property. With an open-peril policy, anything that’s not specifically listed on your policy as an exclusion is covered. Not all insurance companies offer this type of policy.
