Is Theft of Cash Covered by Homeowners Insurance?

Fran Majidi
November 4, 2020

What happens when a burglar breaks into your home and steals a large amount of cash?

A homeowners policy can reimburse you for the missing money but only only up to a certain dollar amount. This limit is typically around $200. So if you had $2,000 stolen from your home you would only be reimbursed for a small portion of that amount. The specific amount of coverage for stolen cash depends on your insurance company and your specific policy. So be sure to check with your insurance professional for the reimbursement details for stolen cash. Your policy may offer a higher limit on cash such as $500. Claiming a loss of cash in a burglary requires documentation to substantiate the loss such as a recent ATM receipt or a withdrawal receipt from a bank. So hang on to banking receipts if you plan to keep a large amount of cash in your house. How do insurance companies view cash? Cash typically falls into the same category as coins, medals and collectibles, travelers checks and stored value cards. An aggregate limit is applied to the whole category of this type of personal property in a standard homeowners policy.

Fire or Other Peril

It is not just a burglary of cash that is covered by your homeowners insurance. Money that is damaged or destroyed by fire or any other peril is covered by your homeowners insurance. That is why it is a good idea to keep the money in a safe place in your home such as a waterproof and fireproof safe.

Deductible Greater Than Cash Payout

Don’t forget that your homeowners policy comes with a deductible. A deductible is the amount you need to pay before a home insurance company begins to pay for damages or losses. How much is your deductible? What if your deductible is $500 and your cash reimbursement is only $200? Paying $500 to get back $200 doesn’t make a lot of sense. Of course, if you lost much more than cash in the burglary or fire, paying the $500 is a fair price to pay for the insurance company to begin to pay for damages.

Adding an Endorsement

You can buy higher coverage limits for cash and other valuables through add-ons on your home insurance policy called endorsements. So if you would like a higher coverage limit for cash, reach out to your insurance company and ask about adding an endorsement to your homeowners policy.

Why People Keep Cash At Home

There are a number of reasons as to why people like to keep cash in their home. They may believe keeping money at home is safer than keeping it in a bank. They may not have access to a bank or they may feel uncomfortable using a bank. They may want to have quick access to the cash in case they want to make a big purchase.

Unbanked Americans

According to the Federal Deposit Insurance Corp., about 7.1 million households are unbanked. These households rely on alternative financial services such as check-cashing stores and pawn shops to conduct their finances. And many keep the cash that they do have at home. This makes them vulnerable if a robber, fire or tornado should strike. They could be out thousands of dollars.

Protect Your Money

Keep only low amounts of cash in your home and keep that in a secured location such as a safe. Want to keep more money in your home? Review your homeowners policy and ask about adding an endorsement to your policy, so your cash limit will be higher if a theft, fire or violent storm occurs.

Open Bank Accounts

With a bank, your money is protected by the FDIC so your money will always be there when you need it. Opening a checking and savings account is a good place to start. You can even have them linked together through online banking so you can move money between accounts with ease. Got more money for saving? A certificate of deposit offers fixed savings terms for as little as one month and up to five years. And a high-rate money market account is also a good savings option. But you will need to pay a higher minimum deposit and higher balance requirement with a money market account than with a traditional savings account. So choose this option if you have a lot of money that you want to save.

Make sure you have a homeowners insurance policy that not only offers cash reimbursement but also protection for your most valuable asset, your home.

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