A basic homeowners insurance plan encompasses different forms of coverage, such as personal property. It’s important to understand exactly what your policy covers in terms of personal possessions. Listing your personal items and sharing the list with your insurer can help ensure all your valuable belongings have sufficient financial protection.
Personal Property Insurance: The Basics
This personal property coverage pays for replacing or fixing damaged personal items resulting from a peril listed in the policy. Perils are disasters such as severe storms or fires. The policy further protects against losses from vandals and thieves.
You can find out how much personal property insurance you have on your policy’s declaration page, which includes all your coverage. It’s the first documentation you receive after you enroll in a policy. The amount of your personal property coverage is defined by a “coverage limit,” which may represent from 20 to 50 percent of the policy’s limit for the home’s structure.
Estimating the Amount of Coverage Required
Sharing your personal property inventory list with your insurer will help determine the exact amount of personal property coverage you need. Be aware of the difference between actual cash value (ACV) and replacement cost value (RCV) in terms of assessing the value of your personal property. ACV factors in depreciation, whereas RCV only reflects current market costs for replacing items.
RCV coverage is usually more expensive than ACV coverage. Many homeowners still choose RCV coverage because it means paying less when filing a claim. Your deductible amount is a variable you can control that affects your costs. It’s simply what you pay when you file a claim before your policy covers the rest, as both insurers and homeowners share risks.
Several personal items may be difficult to assess in terms of value. Antique jewelry, for example, maybe valuable to one individual but worthless to another. Your insurer may determine certain possessions require a professional appraisal. Other personal possessions to consider for coverage include furniture, appliances, electronics, tools, and kitchenware.
You can determine the value of your personal items by making an inventory list and adding up the values of all the items. Then compare this total with the coverage limit listed on your policy. If the value of your personal possessions exceeds your policy’s coverage limit, consider purchasing add-on coverage or raising the coverage limit. Most homeowners policies allow you to customize this amount.
Some homeowners may decide to just give ballpark estimates for their personal property without actually doing inventory. The problem with estimates is they can be extremely inaccurate, leading to overpaying or underpaying on insurance. It’s best to take the time to evaluate each possession and find out from your insurer about your coverage options.
Getting the right personal property coverage comes down to working with an insurer that understands your needs. Contact our experts at J. Archer Insurance Group for more information on personal property insurance.