What Is Personal Property Coverage: Home Insurance 101
Whether it's your furniture, clothing, electronics, appliances or other things, your stuff matters. Your belongings also have financial value. Personal property coverage, also known as contents insurance or Coverage C, can help you to replace your items after a covered loss, like a blaze or theft, happens. In this article, you'll learn what this insurance covers and how it can protect you.
What Does Personal Property Coverage Protect?
Your standard homeowners insurance policy not only offers dwelling and liability coverage, it also protects your personal property up to policy limits.
Under a standard homeowners policy, your insurer defines your personal property as the things you own, including shoes, clothes, furniture, computers and other items in your home.
Personal property insurance pays to replace belongings if they're stolen, damaged or destroyed by a covered peril listed in your policy.
For instance, if a kitchen blaze burns your table, chairs and other furniture, your personal property coverage would help you replace or repair your belongings.
Which Belongings Does Personal Property Insurance Cover?
With a standard home insurance policy, personal property coverage protects things inside of your house. It also offers protection when they are in other locations, like in your car. Here are some common types of contents covered by homeowners insurance:
- Home Decorations
- Photographic Equipment
- Fitness/Sports Equipment
- Outdoor Equipment
- Jewelry/ Watches
Named Vs. Open Perils Insurance Policies
Your insurer will reimburse you for your personal property based on the homeowners insurance plan you have.
Under standard homeowners insurance, there are two kinds of personal property insurance available: named perils and open perils coverage.
Personal property insurance places limits on the value of expensive items, such as jewelry, silverware and art. You may have to purchase additional insurance for these items, which will add to your insurance cost.
What Is Scheduled Personal Property Coverage?
A standard homeowners insurance policy typically sets a limit on what your policy will cover for valuables after a covered loss takes place. For instance, a carrier may impose a $2,500 sub-limit for your art after a fire. If you have a painting that's worth $5,000, you would only be covered up to $2,500. However, you can receive additional coverage for these items using scheduled personal property, optional endorsements or separate policies.
Some classes of personal belongings may have a limited amount of coverage. They include:
- Silver, gold, pewter
- Cash and coins
- Watercraft, trailers and equipment
- Jewelry, watches and semi-precious stones
- High-end art and antiques
- Stamp or coin collections
- Musical instruments
- Expensive cameras
1. Hazards Covered Under Named Peril Policies
When a covered hazard destroys your property, your insurer will provide coverage if you have personal property coverage.
Insurance companies will only reimburse you for your things when they are damaged or destroyed by a named peril, which are listed on the declarations page of your policy.
Here are some common perils that personal property insurance covers:
- Hail, windstorms, lightning
- Fire and explosions
- Damage caused by aircraft
- Damage caused by vehicles
- Riot or civil disturbances
- Smoke damage
- Falling objects
- Volcanic eruption
- Damage from heavy snow, ice or sleet
- Frozen pipes
- Water damage from plumbing or HVAC overflow
- Water heater cracking, tearing and burning
- Damage from electrical current
Additionally, some insurers may exclude a few perils that are normally covered under a home insurance policy or they may require a special deductible if you live in an area where hail or windstorms are common.
2. Open Peril Policies
An open peril policy protects your belongings from different kinds of perils unless your insurer excludes specific hazards in the declaration page.
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Homeowners Insurance Exclusions
In addition to exclusions, your personal property insurance won't also cover items you've lost. Most policies exclude coverage damages from the following hazards:
- Damage from tree roots
- Faulty construction
- Damage caused by rodents, pests and vermin
- Natural wear and tear
Personal Property Policies: Actual Cash Value (ACV) Versus Replacement Cost Value (RCV)
Standard homeowners policies pay either the actual cash value (ACV) or replacement cost value (RCV).
1. What Is an Actual Cash Value Policy (ACV)?
Insurers base the actual cash value (ACV) of your homeowners policy on the cost of your personal property while considering its depreciated value.
If you have an ACV policy, your insurance company will reimburse you for the depreciated value of your furniture. As a result, you may receive less money than it may cost to buy a new sofa in a store.
2. What Is Replacement Cost Value Policy (RCV)?
Replacement cost coverage policies usually pay the dollar amount that it will take to buy a new item at the time you file a covered claim. RCV policies don't consider the depreciated value of your personal belongings.
As a result, insurers charge higher premiums for these policies than ACV policies. For instance, if a thief breaks into your home and swipes your computer, your personal property insurance would cover the cost of buying a new one at the current market value.
Most homeowners insurance policies cover the replacement cost value (RCV) of your home's physical structure and the actual cash value (ACV) for your personal property. However, your carrier will give you a choice to select between ACV or RCV coverage for your things.
Coverage Limits for Personal Property Insurance
On an applicable insurance policy, the coverage limits you'll need depend on how much personal property you own and how much they cost.
According to the Insurance Information Institute, insurance companies usually offer coverage of 50 to 70 percent of the insurance you have on structure of the home.
For instance, if your policy dwelling coverage insures you for $400,000 for your home's structure and you opt for a 50 percent personal property protection, your insurer would give you a $200,000 coverage limit.
Your policy also includes off-premises coverage. It means your insurance covers your belongings anywhere in the world unless you have decided to exclude this coverage from your policy.
How Much Does Personal Property Insurance Cost?
The price you'll pay for your personal property premium depends on several factors.
The first issue that will affect your premium is your policy type. For instance, an Actual Cash Value Policy would cost much less than a Replacement Cost Value policy. The ACV would provide you with the depreciated value of your things. An RCV would replace your items with new ones at the current market value.
It will also depend on the value of your items. The Insurance Information Institute recommends that you take an inventory of your personal belongings. For instance, a person whose belongings total $25,000 would have a lower premium than someone whose valuables cost $100,000.
What Home Insurance Personal Property Amount Do I Need?
Here is a simple process to determine how much personal property coverage you'll need:
- Walk around your home and take photographs or videos of your personal property.
- Write down a list of your valuable items and calculate how much each one costs.
- For bulk items, like kitchen supplies or shoes, estimate a round figure.
- Add up all of your items, then round it to the nearest $10K.
For instance, if you have $38,000 worth of personal items, round your personal property coverage up to $40,000.
How To File a Personal Property Claim
1. Contact the Authorities in Your Area
Call the police if someone has broken into your home and stolen items. Ask for a copy of the police report so you can submit it to your insurance company. If your home is on fire, contact the firefighters to put out the blaze.
2. Take an Inventory of Your Losses
Create an inventory of items in your home and document them with photos, receipts, and item details (like serial numbers). These can later help your insurance adjuster determine an amount for a payout.
3. Contact Your Insurance Company
You should call your insurance company as soon as you can. There is usually a time limit when reporting, so file as soon as possible, so your carrier can't deny your claim.
Provide the following information to your insurer:
- Name on the policy
- Policy number
- Cellphone number
- Claim type
- Information about your property loss
4. Complete Your Claims Form
You will be assigned a claims adjuster and asked to complete a claims form about your loss. After you submit your claim, the adjuster will start the process to determine the extent of your covered losses.
Remember that a deductible will subtracted from a payout.
Protecting Your Personal Belongings with Adequate Personal Property Coverage
Finding affordable coverage for your personal property is easy once you know how much of your belongings you need to protect. Always look at your dwelling coverage and ask an agent how much of that coverage is allotted to your personal items. Create an inventory documenting your valuables along with receipts and serial numbers. Choose a policy limit that will cover all your possessions.
Using SmartFinancial, you can find a homeowners insurance policy that meets your needs and budget. You may even save up to 40 percent on your insurance premiums. Enter your zip code below for a free homeowners insurance quote.
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