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.
Also known as Coverage C, personal property is a standard coverage within your home, condo or renters insurance policy. Personal property coverage pays to replace your belongings if they’re damaged or stolen due to a covered event, such as fire, theft and vandalism.
What does personal property insurance cover?
Personal property insurance covers belongings such as furniture, electronics, clothing and appliances if they are damaged or stolen due to a covered event. Generally speaking, it covers these items whether they are in your home or car.
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 does personal property insurance not cover?
Personal property coverage is important, but it does not cover your home’s structure. Coverage for the home itself falls under your dwelling insurance.
In addition, personal property coverage 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.
How much personal property coverage do I need?
You want enough personal property coverage to replace all your belongings if your home is severely damaged. This amount usually falls between 50% and 75% of your home’s dwelling coverage. The best way to figure out the total replacement cost of your belongings is to create a home inventory.
How do I create a home inventory?
Make a list
Go from room to room and make a detailed list of all your belongings.
Document your items
Take pictures of the items and store them electronically. You should also keep original receipts.
Store everything in the cloud
Laptops can be stolen, so try keeping your list and photos in a cloud-based digital folder that can be accessed from more than one device.
What is a typical personal property coverage amount?
Most policies offer personal property coverage that is between 50% and 75% of your home’s dwelling coverage 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.
Check the declarations page of your home insurance policy to confirm your personal property coverage amount. Remember, you can always increase your coverage if you want.
Scheduling your personal property
Most home insurance policies place a dollar limit on the coverage for 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. Examples of high-value items include:
- Jewelry
- Furs
- Fine art
- Stamps and other collectibles
- Firearms
- Antiques
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.
| 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 collective coverage, you don’t need to provide details on each item up front.Actual cash value vs. replacement cost
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 choose the coverage that’s best for your situation. While it may cost a few extra dollars per year, replacement cost coverage could be a better option because it will reimburse you for the cost of buying new items similar to those you lost. By contrast, actual cash value will reimburse you based on the depreciated value of your belongings.