When it comes to insurance, personal property coverage can be often overlooked. Homeowners insurance policies typically cover personal property for either 50% or 75% of the dwelling insurance amount. For example, if your dwelling is covered for $350,000 and your personal property coverage is 50% of that, you will have $175,000 in personal property coverage.
But is that enough to protect you if something should happen? Here are six steps to making sure you have adequate coverage for you personal belongings.
1. Conduct a Personal Property Inventory
Create a list of your personal belongings in your home and their value. While a simple list will suffice, the more details the better. For larger items, list the serial number, date, and cost of purchase and include receipts if possible. You can also take a video describing the items in your house or take pictures for additional documentation. Keep all these items together in a safe place.
You can review your list annually, or just update it each time you purchase something of value. Not only will this help you determine your coverage needs, in the event of a loss, it can make it easier for you to quickly file a claim that’s supported by accurate documentation.
2. Decide if You Want Actual Cash Value or Replacement Cost
Actual Cash Value refers to coverage for your home and possessions for the “market value” at the time they are destroyed, damaged or stolen. This means that your insurance company factors in depreciation when calculating the amount you receive for that item.
Replacement cost is the amount it would cost to replace your items with the same item, or similar ones, after a loss. This cost is usually calculated as the initial amount you paid for the item. Of course replacement coverage will be more expensive than cash value, so you may want to consider the age of your items. The newer they are, the closer their value will be to the actual replacement cost.
3. Check Your Policy for Sublimits
A standard homeowners policy typically sets a dollar limit, called a sublimit, on how much it will pay for certain categories of valuables like jewelry or artwork. If you’re policy has a sublimit of $1,500 on jewelry, but the watch you had stolen was worth $2,500, you’ll only be covered for $1,500 of that value. If your sublimits don’t cover a type of loss that may be important to you, you may want to consider scheduling these items.
4. Schedule Your High Value Items
You can increase the coverage limits on certain items by adding a scheduled personal property rider to you policy. This rider designates separate coverage for the full appraised value of the item. This is beneficial for two reasons. First, it provides all-risk coverage—meaning that the item is covered for all risks, not just the “covered perils” outlined in the main homeowners policy. Second, scheduled personal property is typically not subject to your deductible.
Here are some items you may want to consider for scheduled personal property coverage:
- Personal computers
- Stamps & coins
If you own something of high value, you may want to talk to your insurance agent to see if it’s eligible for coverage.
5. Determine the Need for a Special Personal Property Endorsement
Standard homeowners insurance policies do cover personal property within your home, but often only to a certain limit and from specific causes of loss, or perils. Adding a special personal property endorsement to your homeowners policy expands your coverage to include all causes of loss, except those specifically excluded. This affords you more coverage and can help protect your belongings in situations like dropping your new flat screen TV while installing it.
6. Evaluate the Need for Flood Insurance
Losses due to earthquakes, floods, war and certain other perils are excluded from coverage. While earthquakes and war are quite unlikely in Colorado, floods can be a concern – even for those that are in a low to moderate risk areas. Check out our article on the 5 Reasons to Consider Flood Insurance, and if it’s of interest have a conversation about it with your insurance agent.
Review Your Policy Today!
While reviewing your insurance isn’t necessarily exciting, it sure beats not having the right coverage when disaster strikes. Contact us today and we can connect you with an agent to review your policies and see if you have adequate coverage!