Protecting your valuable possessions, whether they are electronic devices, family heirlooms, or new furniture, is a top priority for homeowners and renters. You probably already have the homeowners, condo, or renters insurance you need.
These policies almost all include contents insurance. Also known as personal Property Coverage, these policies almost always include this coverage. This means that your policy will pay to replace any belongings damaged by covered perils, such as fire.
Although contents insurance is available in other countries as a separate policy, it is not offered in the United States. This protection comes standard with all insurance policies for your home (e.g. homeowners, renters, condo insurance). A single policy that covers contents insurance can provide financial protection for a wide range of risks.
What is the coverage of home contents insurance?
What exactly is contents insurance? It covers your contents up to the policy limits, barring exclusions.
Your personal property coverage covers the majority of your belongings in your home. Insurance professionals simplify this concept by explaining that contents insurance covers any property that might be damaged if your home is flipped upside-down.
Your contents insurance may not cover items like carpets or hot water heaters, but your dwelling insurance likely does. This applies to condo and home owners. Your landlord is usually responsible for insuring the built-in features if you rent.
You may be able to get protection for items you keep off-premises up to a specific policy limit, and reimbursement if your guests’ possessions are damaged or destroyed due to a covered peril. However, it will not protect possessions of people living with you for a long time but who are not your relatives (e.g. tenants or roommates).
Your house and contents insurance does not kick in until you have suffered a covered loss. Your policy will cover the cost of replacing or repairing your couch if it is damaged by fire. However, if you spill on the couch and need a replacement, your claim will likely be denied.
What is usually covered?
- Electronics, such as TVs and computers
- Sports equipment, including bikes
- Appliances that do not come with a built-in appliance (e.g. blenders, toasters and mixers)
The following is what isn’t covered:
- The full price of costly items
- Both aircraft and vehicles
- Features like cabinets, flooring, furnaces, and cabinets that have been installed. If you have a home, dwelling coverage will cover it.
- Fish and birds, as well as animals
- Items that are not covered by an insurance policy (e.g. jewelry)
- Any tenant or boarder may own any belongings
Limits on contents insurance coverage
According to the Insurance Information Institute (III), , most homeowners insurance policies provide contents insurance up to 50-70% of your coverage. If you have $300,000.00 worth of dwelling insurance, you can expect to pay $150,000-$210,000 for house contents insurance.
You can set your own contents insurance limits as a condo renter or owner. However, your carrier may recommend a minimum coverage. If you live in an area that allows you to purchase standalone contents insurance, such as the UK and Australia, you can buy the contents insurance policy you desire with the coverage you need.
If you are looking to purchase contents insurance and set your coverage limits, it is a good idea to first create a house inventory. This will allow you to list everything you own. This will allow you to determine the limits of your policy.
You have the option to choose from these two options, regardless of whether you live in a condo, a house, or a rental property.
Actual cash value versus replacement costs value
By default, policies will include actual Cash Value (ACV). This coverage includes depreciation. It means that they will pay the actual cash value of the item today, after any covered loss. If you are looking to replace your TV in 2010 with a newer model, you will have to pay a substantial portion of the cost.
There is an option to increase your coverage: You can choose replacement value (RCV). This contents insurance covers the cost of replacing the item with the exact same item that was purchased today at current prices.
RCV is a way to improve your quality of living after a covered loss. However, it comes at a higher cost. You can expect your premiums will be higher if RCV is chosen over ACV.
Sublimits for valuable items
You’ll notice that many high-value items are included in the list. Although personal property coverage will usually pay to replace an item, most policies have sub-limits. Your policy could pay up to $1500 for example.
replace stolen jewelry.
To find out if there are any sub-limits, read your policy. You can add expensive items to your home and contents insurance by adding a rider, or endorsement. This will increase your coverage. You may also be able get separate insurance policies for them.
What contents insurance do I need?
Insurance experts recommend that you have some type of contents insurance. Many mortgage lenders require that homebuyers have house and contents insurance. However, landlords often require tenants to have renters insurance. The personal property section is optional and up to you.
Even though contents insurance may not be required, it can help you recover from a disaster. This type of coverage will cover you for the repair or replacement of your belongings in case there is a fire, theft or windstorm. It can also protect your property up to policy limits.
It is a good idea to compare the contents coverage of different policies.