Over the past couple of Christmases, you’ve probably acquired more than a few valuable items. At the very least, your house probably isn’t empty. Thankfully, your homeowners insurance covers some portion of your possessions after a loss, such as a fire or burglary. But how much does it cover, and is it enough to replace your most treasured assets?
How much have you thought about your insurance protection? If you have purchased or inherited valuables over the years, or even if you have not taken a recent inventory and assessed the replacement value of your daily use items, maybe it’s time for a review.
Questions for Property Owners
As you’re determining whether your current coverage is adequate, ask yourself a few questions:
- How do I determine whether or not I have enough coverage?
- In terms of personal property, what is covered? What isn’t?
- What should I do if I have to file a claim?
- Have I made any large purchases lately?
Having answers to these key questions will give you peace of mind if the unthinkable should happen to your home.
Does Your Homeowners Policy Include Contents Insurance?
Your homeowners insurance policy comes with contents coverage based on the overall value of your personal property and up to approximately 50 to 70 percent of the amount of coverage on your home’s structure. For example, if you have coverage on a $200,000 house, your policy may include approximately $100,000 in personal property coverage.
However, if you have lived in the house for a few years and are a collector or have acquired valuables (such as diamond jewelry or a work of art), your basic homeowners insurance policy may not cover the replacement value of these items if they are destroyed or stolen. In this case, you may need to purchase a rider on your homeowners policy to cover these special items. Your local Trusted Choice member agent can help to go over these items and the contents insurance needed to cover them.
Be sure to discuss coverage for all possessions of value, such as your new iPhone, furs, golf clubs and carts, computers, fine art, china, musical instruments or expensive sporting equipment. You may even want special coverage for that elk’s head above the fireplace or other taxidermy.
Taking Stock of Your Personal Property for Insurance
This is a key component of the personal property insurance process. Your inventory should be extensively documented, noting any valuable item that is irreplaceable (such as heirlooms). Document your possessions by taking pictures of your home’s contents, including your antique armoire, diamond collection or firearms.
It is a good practice to provide detailed descriptions with each photograph, such as serial numbers or brand names when appropriate. Alternatively, you can scan each room of your home with a video camera and narrate each item included in your home’s inventory of contents.
Be sure to keep your inventory as current as possible, and store it in a secure place, such as a fire safe. If you need to file a claim, a current inventory will help streamline the process. Not only will you not have to sit and think about everything you lost, but you’ll be relying on records, not memory.
Does a Home Policy Cover Personal Property in Your Car?
Surprisingly, in the event of theft or flood damage, automobile policies usually do not cover personal property in a vehicle.
However, homeowners insurance policies generally consider all personal property from the home, even if it is temporarily located or stored in the vehicle. So, an item in your car is considered to be personal property covered in your homeowners policy. Be sure to discuss the details of your policy with your agent to ensure that your important possessions are covered.
Actual Cash Value vs. Replacement Cost
It is important to understand these terms and how they apply to your policy, especially when it comes to contents insurance. In the event that you have to file a claim due to fire or burglary, your independent agent can help you determine the most optimal fit to suit your needs.
“Actual cash value” accounts for an item’s original cost minus depreciation. This type of coverage is standard.
“Replacement cost” refers to the actual cost of replacing a lost item. For example, the actual cash value for an older appliance may be $800, but the current cost of replacing your appliance may be $1,500. Thus you can potentially receive the amount of compensation needed to buy a replacement item at its current cost if you have this kind of home and contents insurance. Note that getting appraisals for very expensive items is an important step in making sure they will be covered in a loss.
Be sure to discuss these two options with your agent and decide which type of coverage is best for your needs. Replacement cost coverage will most likely cost about 10 percent more, but it may be well worth it, given how quickly some items depreciate in value.
Filing a Contents Insurance Claim
The claims process is much easier if you have a complete and accurate inventory of your personal property. First, with your detailed inventory on hand, note the claim date, reason for the loss – such as burglary or fire – and provide detailed item descriptions. Provide this information and an item photo, if possible to your agent, who can work with you to quickly complete the claim process.
How to Get a Contents Insurance Quote
Contact your agent if you want to shop for the best coverage at the best price, or you know you need more personal property insurance.
Your agency should be able to access multiple insurance companies and policy types, and have the ability to compare policies and quotes and customize affordable rates based on your needs. Your agent also can assess how much coverage you need for your specific items of value.
Protect the Property that Makes Your House a Home
Your home – and its contents – give comfort to your family and make your house more than just a roof over your head. Your belongings and treasures transform your house into your home and provide the quality of life you are accustomed to. Many of us don’t stop to assess the value and importance of our belongings until something happens to them. Be prepared, and don’t let unexpected events derail you financially.