Does Homeowners Insurance Cover Theft?

Homeowners insurance covers a wide range of risks. It can assist in the repair or replacement of your home if it is damaged in a fire or windstorm, as well as cover medical expenses if someone is injured on your property. Standard home insurance policies cover your personal belongings as well, including losses caused by theft.

Your homeowners policy covers your belongings while they are in your home and may also provide limited coverage when you store them or take them on vacation. However, insurance companies set limits on how much they will pay for certain types of personal property.

Before purchasing a home insurance policy, it is critical to understand which types of theft are and are not covered.

Does Homeowners Insurance Cover Theft?

Theft of personal property such as clothing, computers, electronic equipment, and furniture is typically covered by most home insurance policies. Items in detached structures on your property, such as a shed, are also covered under personal property coverage. Personal items stolen from offsite storage units, hotels, or your car are typically covered by homeowners insurance, with limitations.

Insurance companies determine your personal property limit as a percentage of your dwelling coverage, typically beginning at 50%.For instance, if a policy provides $200,000 in dwelling coverage, it may also provide $100,000 in personal property coverage. However, you can sometimes modify the personal property limit to meet your needs. Take a thorough inventory of your personal belongings and determine how much they will cost to replace before purchasing a homeowners policy.

  • If thieves cause damage to your home during a break-in, the dwelling coverage in your policy may pay to replace broken doors or windows. Vandalism is also covered under dwelling coverage. So, if a burglar breaks into your home, steals cash and jewelry, and spray paints your walls, you can file a claim against your personal property coverage for the stolen items and your dwelling coverage for the damage to your home.

What Are the Limits of Theft Coverage?

Personal property coverage will be included in your policy, typically at 50% of your dwelling coverage. However, insurers place restrictions on what they will pay for certain types of belongings.

Limits for Certain Types of Personal Property

Your homeowners policy does not provide blanket coverage for all of your personal property. Instead, it imposes restrictions based on what is stolen or damaged. Here's an example of a limit from The Hartford's Nevada homeowners policy:

  • Banknotes and coins - $200
  • Residential property used primarily for business- $2,500 ($500 for business property stolen from the insured premises)
  • Firearms - $2,500
  • Furs, jewelry, and watches - $1,500
  • Goldware and silverware - $2,500
  • Passports, personal records, stamps, securities, and tickets - $1,500
  • Trailers - $1,500
  • Watercraft, including their engines and trailers - $1,500

Although many home insurance policies cover items stolen from off-premises locations such as a storage unit or hotel room, providers may limit the amount paid to 10% of your total personal property coverage. So, if a thief steals $20,000 in stored furniture and your policy covers $50,000 in personal property, the insurance company will most likely only pay $5,000 for the loss.

  • The most common type of coverage is the HO-3 or "Special Form" homeowners policy. Unless specifically excluded in the policy terms, it covers damages caused by all types of perils, such as fire, theft, vandalism, and windstorms.

Actual Cash Value vs. Replacement-Cost Coverage

For stolen personal property, most standard home insurance policies pay the actual cash value. The market value of an item for its age and condition, which decreases due to depreciation, is its actual cash value. So, if you paid $1,200 for an area rug five years ago, it may only be worth a few hundred dollars today.

Replacement-cost coverage, on the other hand, compensates you for the cost of replacing the lost item with a new one.

When Is Theft Not Covered by Homeowners Insurance? 

Typically, providers will not cover stolen personal property in a home that has been vacant for a specified period of time. For example, if you leave your house empty for a year to travel around the world and thieves steal all of your belongings, your insurance company may deny your claim or cancel your policy.

Exclusions

Most standard home insurance policies exclude coverage for certain types of property losses, such as:

  • Aircraft (including hobby aircraft not intended to transport cargo or people) and hovercraft
  • Most automobiles, including their accessories and equipment
  • Business data, including paper records
  • Credit cards
  • Property covered by another insurance policy
  • Renters' property who are not related to the insured
  • Pets
  • Rental equipment stored off premises

Insuring Excluded Property

Just because a possession isn't covered by your home insurance policy doesn't mean you can't insure it. Insurance companies provide policies for a wide range of property.

Many people consider their homes and automobiles to be their most valuable possessions. If thieves steal personal belongings from your home or car, your homeowners insurance policy may cover all losses. However, if they steal permanently installed equipment from your vehicle, such as a stereo system, or the vehicle itself, you'll most likely have to rely on the comprehensive coverage of your auto insurance policy to cover those losses.

Many nationwide insurers provide insurance policies that cover the majority of people's needs. If you get your auto and home insurance from the same company, they may also cover:

  • Boat
  • Business
  • Motorcycle
  • Motorhome
  • Off-road vehicle
  • Pet

Alternative Ways To Protect Against Theft Loss 

Certain personal item limits may result in some of your belongings being underinsured. For example, if you have a $5,000 wedding ring and your home insurance only covers up to $1,500, you'll need additional coverage.

Valuable Items Endorsements

Many carriers provide valuable items coverage, also known as "scheduled personal property coverage," as an add-on to your homeowners policy. You can purchase valuable item coverage for a variety of valuables, including:

  • Artwork and antiques
  • Cameras
  • Stamp and coin collections
  • Firearms
  • Musical instruments 

Other Types of Protection

Expensive products, such as computers and high-end cellphones, frequently come with extended warranty packages. These types of packages frequently include loss and theft protection in addition to damage protection.

Your credit card may also provide some purchase protection for items purchased with the card. However, credit card insurance frequently provides secondary protection, which pays only after your primary insurer's limit has been reached. For example, if you used your credit card to purchase a $2,000 watch and your insurance only pays $1,500 after the watch is stolen, the credit card's protection may cover the difference.

Anti-Theft Measures

Many precautions can be taken to keep thieves from stealing personal property from your home.

  • Install motion sensor lights along your home's front, sides, and back.
  • Install a burglar alarm system that alerts a central station when triggered.
  • Install window locks and deadbolt locks on doors.
  • Trim bushes and trees around windows to eliminate hiding places.
  • Avoid leaving valuables such as lawnmowers unguarded in your yard, even for a few minutes.
  • Avoid placing valuables such as expensive artwork and entertainment systems in locations that people can see them through uncovered windows.
  • Consider getting a dog to deter intruders.

It's also beneficial to understand how thieves operate. Bedrooms are frequently targeted by burglars looking for valuables such as cash and jewelry. They also take electronic and gaming systems from living rooms, as well as computers and cheque books from home offices. Hide valuables in places where thieves might not think to look. Protect your most valuable possessions by locking valuables in desk drawers or installing a safe.

Frequently Asked Questions (FAQs)

How much does homeowners insurance cover for theft?

Property damage limits are set by insurance companies as a percentage of your dwelling coverage, usually around 50%.As an example, if your policy includes $500,000 in dwelling coverage, it will include $250,000 in personal property coverage. However, some insurers will let you adjust your personal property limit to meet your specific needs.

How much Is homeowners insurance?

In 2021, the average annual home insurance premium in the United States will be $2,285. However, homeowner rates are determined by personal factors such as your home's age, location, construction type, location, claims history, and the deductible you select. Contact a few insurance companies and request a quote for accurate rates.

Which areas are not protected by most homeowners insurance?

Theft of aircraft, automobiles, business data, or pets may not be covered by home insurance policies. Examine the personal property (Coverage C) section of your insurance policy to determine what your coverage includes and excludes.