Is Homeowner’s Insurance able to cover stolen cash?
According to the Insurance Information Institute, a homeowner’s policy typically covers $200 in cash that is lost due to theft, fire, or other peril. You may also be covered for cash stolen from your home, up to $2000. You will need to prove that the cash was actually in your possession and not stolen.
“A homeowner’s insurance policy is not intended to cover money. This is why you should go to a bank. Drew Conley, an agent at Mill Creek Insurance in Ohio, said that a bank is federally insured.
In the event of a fire, burglary or other disaster, you could lose hundreds to even thousands of dollars by hiding cash under your mattress or in your freezer.
Many Americans have a habit of stashing money at home, particularly if they are hesitant about financial institutions or need quick cash. But if the cash ends up stolen or is destroyed in a fire, tornado or another disaster, then there’s not much hope of recovering the full amount from your home insurance company.
Do I need additional home insurance to cover cash kept at home?
An endorsement is a way to increase your coverage for cash, coins, and other valuable items.
The standard comprehensive homeowner’s insurance policy includes a $200 cash limit. This is the ISO HO-3 $2000, which is used most insurers. A homeowner’s policy that is written on the American Association of Insurance Services form will have slightly more coverage with a $250 cash limit. This is according to Donna Popow, senior director of knowledge and ethics counsel at The Institutes. The Institutes is a non-profit group of chartered property and casualty underwriters.
Insurance agents estimate that you will pay $20-25 per year for double the standard cash coverage. Higher-end policies cover higher amounts such as a $2,000 cash limit, according to Kevin Foley, New Jersey-based owner of PFT&K Insurance Brokers. Agents claim that Chubb is one of the companies offering higher cash limits. However, Chubb representatives did not respond to inquiries.
How can I prove that cash was stolen from an insurance company?
Insurers won’t pay more for lost cash because there isn’t any documentation and no way to prove it. Don Kemp, a financial representative with Espey Financial Group, Atlanta, says that even if you took a video of the cash before its disappearance, it is impossible to prove the cash was there when the fire or theft occurred.
The Bank is safer with cash money
Gail Karlitz, a Connecticut resident and author, had approximately $2,000 saved in a safe she kept in her fireproof home. She had begun to save money during the Y2K panic and enjoyed the ease of access to cash.
Teenagers from her area took the safe and used it to purchase drugs.
They took the safe and threw it on the back deck. Then they pry it open. They just grabbed everything that was in the safe,” says Karlitz, whose books include “Growing Money: A Complete Investing Guide for Kids.”
Allstate, her insurance, only covered $200 of the approximately $2,000 in cash.
“At the time I was annoyed that the coverage was so limited. Now that I think about it, the limit makes sense. Karlitz states that anyone could report any amount cash and it would not be possible to verify it. “I believe ignorance about cash coverage limits is more common than you think. It’s something to be aware of and a warning sign.
Karlitz now keeps much less cash at home. She’s not the only person who has reported losing cash at home. In May 2011, a senior citizen from Watertown, Mass. reported that $8,000 worth of cash had been stolen from her home. Police were unable to locate any missing money.
Loretta Worters, vice-president of the Insurance Information Institute, says that money is safer in the bank.
There are many reasons people keep cash at home, including:
* They believe it is safer than a bank.
* They are uncomfortable with banks.
* They may not have easy access to a bank.
* They are hiding money from IRS.
A lack of trust leads to cash laundering
Our economic times have influenced our decision to keep cash at the house. Some people are watching their spending, but still would like quick access to cash in case they want to make a big purchase, according to Lynnette Khalfani-Cox, founder of the financial advice blog AskTheMoneyCoach.com.
It’s not as though they will put the money in the stock market, mutual funds, or anywhere else that might cause them to lose some. She says they might be subject to surrender penalties or fees if the money is placed in a CD that is supposed to last for one year, but they have to withdraw it early.
Khalfani-Cox believes that trust in financial institutions is the bigger problem. According to the Federal Deposit Insurance Corp., 30 million Americans do not have bank accounts and are dependent on other financial services such as pawnshops or check-cashing shops. Other research suggests that this number could be as high as 70 millions. Khalfani-Cox states that many of these people are minorities with low or moderate incomes.
Many consumers feel they have been unfairly penalized, shortchanged, or burned by banks. Khalfani-Cox states that part of this is why banks are causing problems.
However, consumers need to be aware of the possibility for loss.
Khalfani-Cox states, “If you’re keeping cash at home as part your overall strategy to essentially avoid the financial system as it stands today, then that can be risky. You need to understand the pros and cons.”
Your insurance company may be able to help you recover some of your losses if your home is broken into and taken. Although cash is a popular item among burglars, you might only be able recover a portion of the money from your homeowner’s policy. A contract is an insurance policy that has specific terms and conditions. These terms and conditions can vary from one company to the next. You can find out more about your policy by reading the fine print.
Structure coverage
A standard homeowner’s policy typically covers the largest amount of coverage. This is because the structure of your house is usually the most costly category. You may find that your policy will cover replacement cost. This means it will pay the current cost to repair or replace your damage, and not the depreciated value. The policy might also specify the actual cash value. When your claim is settled, your insurance company will subtract depreciation from your damaged structure’s purchase price. To fully cover any loss to your home’s structures, the replacement cost will be higher.
Personal Property Insurance
Your personal property is also covered by homeowner’s insurance. This covers items and furnishings that are not permanently attached to your home’s structure, like cash. Personal property such as jewelry, cash and electronic may be subject to a maximum payout limit. To ensure that you have sufficient coverage for personal property, make sure to carefully read the policy. Talk to your agent if you have expensive equipment or a collection of coins.
Limited Cash Recovery
Donnie Singleton CIC, an independent agent with 38-years experience and the owner and operator of Singleton and Associates, Mount Vernon, Kentucky, says that a standard homeowner’s insurance policy provides “very limited” coverage for lost cash. Typically, it covers $200. However, the exact amount depends on the insurance company and policy. Cash is usually included in the same category as collectibles like coins, medals, bank notes, and coins. The homeowner’s policy will apply an aggregate limit to all personal property. You should not expect to receive reimbursement for cash that you have lost in a burglary, unless your policy states otherwise.
Safer alternatives
A secure, easily accessible account that can be accessed quickly and conveniently is safer than keeping cash at home. To claim cash money stolen in a burglary, you may need to provide documentation, such as an ATM receipt or any other proof, to prove the loss. You should keep your cash safe and secure in a bank account.
