Understanding What Home Contents Insurance Covers
If you have a theft, fire, or other type of insured claim or loss, contents insurance, also known as personal property insurance, can help you replace the items in your home.
Personal property coverage is insurance that protects the items in your home. The contents of your home are all of the various items you own in and around your home. Clothing, electronics, expensive jewelry, and essentially anything movable are examples of personal belongings.
How Do You Get Insurance for Your Contents or Personal Belongings?
There are three common ways to obtain insurance for your contents or personal belongings.
- Home Insurance
- Condo or Coop Insurance
- Renters Insurance
All three of the preceding insurance policies cover personal belongings, additional living expenses, and liability. Furthermore, each policy has its own set of limitations and exclusions.
Are Family Members Covered?
On an insurance policy, the definition of insured includes dependents such as children. It also covers the named insured's spouse. If you are unsure whether a family member is included in the definition of insured on your policy, you should contact the insurance company and inquire. Your agent or broker can go over your specific circumstances and ensure you have the coverage you require.
Are Roommates Covered?
Friends or roommates may live together in an apartment where only one person has insurance. Because they do not fall under the definition of the insured, roommates are not covered by an insurance policy unless they are named on it. As a result, if your friend owns a house and you live in it, or if you share an apartment, and you are not a named insured on their personal belongings insurance policy, you are not covered for your belongings. To share the policy coverage, you would need a renter's policy or to be added to their policy as a named insured.
Are a Guest's Personal Belongings Covered?
Although the personal property of a roommate is not covered under your contents, renters, or home insurance policy, the personal property of others while in your care may be.
Are Contents Covered When Moving?
What happens if your personal belongings are damaged or stolen during the moving process? Certain risks may be covered by your contents insurance while you are moving. However, depending on the type of insurance you have, many exclusions may apply, and coverage may be limited to specific situations. It is critical to ask your insurance broker or representative what is covered during a move to determine whether or not you have the coverage you require.
Are Personal Belongings Covered by Insurance on Vacation?
Your contents insurance will typically cover your personal property while it is temporarily removed from your premises and in your possession anywhere in the world. For instance, if you go on vacation, you will bring some of your belongings with you. If something happens to your personal belongings, your contents insurance may cover you just as if you were at home. Insured items are subject to the same coverage provisions as stated in your policy, including the deductible.
What Kinds of Coverage Are Available for Contents?
Personal belongings are covered in the same way whether you have a homeowner policy, a condo policy, or a renter policy:
- Whether you have a named peril or an open peril policy,
- What is your content's limit?
- Whether your coverage is for replacement cost or actual cash value
- What special limitations or exclusions do you have in your policy?
- What is your deductible?
How Much Are Personal Belongings Insured For?
For condos and renters, you decide how much insurance you need for your contents, and the policy premium is calculated based on the amount you provide.
The contents or personal property limit on home insurance is typically a percentage of the insured dwelling amount—typically 70% of the insured dwelling value. It may be increased or decreased in some cases, depending on your situation.
When it is part of the home policy, you are usually not charged for the contents. When you insure your building, it is included in the insurance package, just like additional structures.
Actual Cash Value vs. Replacement Cost Coverage on Your Contents
The amount you will be paid in a claim depends on whether you have replacement cost or actual cash value coverage.
Replacement cost coverage on contents means that the insurance company may repair or replace the item in the event of a loss. If you had to replace the item, you would be compensated for the cost of a new one.
Actual cash value coverage means you're covered for the item's value less depreciation. This coverage provides only a very limited level of protection. Make sure to ask your insurance agent or broker what the basis of claims settlement is on your personal belongings insurance coverage. If it's actual cash value, you should get a quote for replacement cost insurance.
What Is the Least Expensive Type of Contents Insurance?
Because it pays less in a claim, actual cash value coverage is less expensive than replacement cost coverage.
Because named perils only cover you for the specified risks on the policy, such as fire, smoke, lightning, vandalism, theft, and other items listed on your policy, named perils content insurance is also less expensive than an open perils policy. You will only be covered for the risks listed.
Make certain to inquire about how your contents are covered by the policy you have. When it comes to insurance, cheaper is not always better, so choose the right insurance for you. If you're saving now, consider how difficult it will be to file a claim if you can't get paid because you're not covered, or if you only get half the value of your property.
Business Property
A contents insurance policy protects your personal belongings. Your coverage may be limited if you work from home or have business-related stock items. Inquire specifically about these items so you know whether you need to add coverage or if it is already included.
Deductibles on Your Personal Property
The deductible is the portion of a claim that you will pay out of pocket. If you choose a higher deductible to save money on insurance, even if your contents are covered by the policy, you may be unable to make smaller claims because the value of the claim is insufficient.
Adding Insurance Rider Coverage for Contents or High-Value Items
We've discussed what contents insurance covers and some situations in which people's property may or may not be covered. There is one more aspect of personal belongings insurance about which you should be knowledgeable. This category includes high-value items or items that may be difficult to replace.
Your insurance policy may give you the option of adding coverage for high-value items such as jewelry. If you have antiques or special collections, jewelry, or even musical or sporting equipment (such as a bicycle), you should add a rider to your policy to ensure you are covered.
High-Value Insurance for Personal Property
Finally, if you believe the value of your possessions is exceptionally high, you may be interested in another option for contents and personal property insurance. There are more expensive insurance policies with higher special limits, fewer exclusions, and better claim settlement options, such as no obligation to replace policies.
High-value specialist insurance companies will provide you with policies that are slightly more expensive but may provide better coverage for your lifestyle.