What Is Personal Property Insurance For Homeowners?
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In a standard homeowners policy, personal property insurance — also called contents coverage or Coverage C — will pay to repair or replace your personal belongings after a covered loss, like your house experiencing a fire or burglary. Reimbursement is paid at actual cash value, which is the value of the lost item minus depreciation. Homeowners have the option to buy comprehensive coverage and scheduled property insurance to increase their coverage scope and limits.
How Does Personal Property Insurance for Homeowners Work?
In a standard homeowners policy, personal property coverage works in tandem with other coverage types to protect homeowners against multiple types of losses. As its name suggests, personal property coverage’s specific role is to cover losses to your personal belongings, such as clothes, furniture and electronics.
According to the Insurance Information Institute, personal property coverage limits are typically 50% to 70% of your dwelling coverage limits. For instance, if your dwelling structure — which includes your home’s roof and walls — is insured for $400,000 and you opt for 50% personal property protection, personal property losses are covered up to $200,000.
In a standard home insurance policy, losses are insured on a named peril basis and at actual cash value. In a named peril policy, only the losses specifically listed in your policy will be covered. These include the 16 most common perils:
|Fire or lightning||Vandalism or malicious mischief|
|Windstorm or hail||Theft|
|Riot or civil commotion||Falling objects|
|Damage by aircraft||Weight of ice, sleet, snow|
|Damage by vehicles||Freezing of home systems|
|Smoke||Sudden/accidental power surges|
|Sudden/accidental tearing, cracking, burning, or bulging of home systems||Water/steam discharge from home systems and appliances|
When you file a claim related to one of the losses listed above, your insurance company will reimburse you at actual cash value (ACV). ACV takes into account the age and condition of the items and factors in depreciation. As a result, you may receive less money than it may cost to buy a new sofa in a store.
Upgrade to Comprehensive Coverage
Upgrading to comprehensive homeowners insurance, also called an HO-5 policy, insures your losses on an open peril basis and at replacement cost value. In an open peril policy, all 16 perils listed above are covered plus all losses except those specifically excluded in your policy. Exclusions commonly include floods, earthquakes and mold.
This typically means that the check you receive will be enough to purchase the lost item at what it costs off the shelf today.
Some Items Are Subject to a Sublimit
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.
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
What Does Personal Property Insurance Cover?
In a standard home insurance policy, personal property insurance covers most belongings inside your home for covered losses, such as fire, vandalism and theft. Covered belongings typically include:
- Home decorations
- Dishes and silverware
- Photographic equipment
- Fitness and sports equipment
- Outdoor Equipment
Most policies include off-premises coverage, as well. This means your insurance covers your personal property losses away from your primary residence — your child’s laptop gets stolen from their dorm room, for instance. However, off-premises coverage is usually 10% of your standard personal property limit. So, if your personal property coverage limit is $100,000 and your child’s electronics are stolen while at school, you’d only be covered up to $10,000.
What Isn’t Covered?
While personal property insurance will cover most types of physical belongings, it will not cover all types of losses. Generally, a standard policy will not reimburse you for losses caused by the following perils:
- Damage from tree roots
- Faulty construction
- Damage caused by rodents, pests and vermin
- Natural wear and tear
- Identity theft
How Much Personal Property Insurance 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 $10,000. For example, if you have $38,000 worth of personal items, round your personal property coverage up to $40,000.
How Much Does Personal Property Insurance Cost?
Personal property insurance is already bundled into a standard home insurance policy, which costs $1,213.89 per year, on average for a policy with $250,000 in dwelling coverage. This provides $125,000 to $187,500 in personal property coverage — recall that personal property coverage is usually 50% to 70% of your dwelling coverage limit.
The actual cost of personal property insurance can vary depending on several factors such as the value of your personal belongings, the coverage limits you select, and the location of your home. Additionally, the cost of personal property insurance can also depend on the insurance company and the specific details of your policy.
It is best to get quotes from different insurance companies and compare the cost and coverage options to find the best policy for you. Keep in mind that increasing coverage limits or adding endorsements, such as scheduled personal property coverage, for high-value items will increase your policy premium.
How Do You File a Personal Property Claim?
Filing a personal property claim with your homeowners insurance company can be a straightforward process, but it's important to be prepared and understand the steps involved. Here's a general overview of how to file a homeowners insurance 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. Gather Documentation and Evidence of the Property Losses
This may include photographs or videos of the damage, receipts or proof of ownership for the damaged or lost items, and any other relevant documentation. Provide any additional documentation or information requested by your insurance company. This may include estimates for repairs or replacement, or an inventory of the items that were lost or damaged.
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
- Cell Phone number
- Claim type
- Information about your property loss
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 be subtracted from a payout.
4. Keep Track of Any Expenses Related to the Loss
If you filed a personal property claim alongside a larger claim — your home was burned down, for instance, then you may need to seek temporary living arrangements. If you’ve added additional living expense coverage to your policy, your hotel bills and even meals may be covered.
5. Accept the Settlement
Based on the results of the adjuster’s findings, you will be offered a certain amount of compensation for repairing or replacing your damaged property. If you agree with the settlement amount, you can accept the payment. The settlement is usually calculated using the fair market value or the actual cost of replacing the damaged items. The insurance company will usually send the payment in the form of a check or deposit.
Can I Add Personal Property Coverage to My Existing Policy?
Most standard homeowners insurance policies include some level of personal property coverage so there is no need to manually add personal property coverage to your existing policy. However, if you need more coverage or want to increase the limits of your existing coverage, you can add additional coverage to your existing policy. Beyond paying more to increase your limits, you can also upgrade to comprehensive coverage (expands your personal property coverage to an open peril basis) or buy scheduled property coverage (increase coverage for items subject to a sublimit).
We collected over 100,000 home insurance quotes from multiple counties and insurance companies in each state to produce an average price per state. We then averaged the state averages to obtain a national average price for home insurance in the United States. Home insurance quotes were based on homes with a $250,000 dwelling value.