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What does personal property (contents) cover under my home insurance policy?

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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UPDATED: Mar 19, 2020

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Homeowners Insurance PolicyYou may be wondering, what the personal property (or contents) portion covers under your home insurance policy. Ideally, homeowners insurance is supposed to cover property insurance and the general area of a private home.

In addition to covering the physical structure of the home, most insurance policies also cover personal insurance protection, as well as valuable contents inside the home. That is precisely what this section refers to.

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Types of Homeowners Insurance

Currently, there are eight primary types of homeowners insurance coverage. HO1 is basic coverage, and this includes 11 listed perils. However, the contents are typically not covered with such a policy.

HO2 is a broader coverage and it covers 17 perils. HO3 is comprehensive coverage and covers contents a named peril basis. (HO3 is for renters) HO4 adds even more inclusions to the HO3 policy, specifically on content.

In this policy, contents are covered on an open peril basis. This means that as long as there is not an exclusion on the policy disallowing one certain peril, that practically any loss/damage of contents will be covered.

Contents coverage is referred to as Coverage C. This is the part in the policy that specifically covers home furnishings, personal possessions and electronic gadgets.

In order to have your home contents covered, you and the insurance company must agree to “covered perils”, that is, reasonable circumstances that could result in the damaging or full loss of home contents.

Some of these perils might include a thunderstorm, hail, fire, theft and vandalism. These are typical perils that a homeowners insurance policy might cover.

Homeowners Insurance Options

If you wish to be financially protected from other threats, then you may have to pay more, as these might be considered unusual circumstances. For example, some homeowners want their belongings insured from explosions, riots, aircraft damage, vehicles, smoke, falling objects and even volcanic eruption. There may also be additional coverage for plumbing, heating or air conditioning problems.

Accidental discharge or water overflow can easily damage carpeting, appliances, furniture and other items. Even electricity current damage can be covered. If you want to cover a situation not listed in the homeowners insurance policy, then you can get a clause added to the policy.

What kinds of contents are covered in a traditional homeowners insurance policy?

what does personal property contents coverThe usual items include furniture, clothes, expensive vanities and amenities, appliances like computers and TV sets, and jewelry. If you have other items that you want to include in the policy then you can request special add-ons.

How much will this coverage cost?

This is directly related to the items you want insured. Usually, a home insurance policy gives you 50-65% of dwelling coverage towards your possessions.

You can also buy additional coverage for one specific item that you want insured, and that might not be covered in a normal policy. Understand that there are limits as to how much can be paid for one personal possession.

The insurance company usually puts a limit on home items, something near the current market price. For jewelry, there is usually a limit of about $1,500 or less. If you want one item insured for an inordinately high amount then you can ask for a scheduled endorsement for your insurance policy. In exchange for this special coverage, you pay higher premiums.

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Home Inventory: A Practical Solution

In order to make a decision regarding your home contents, it is best to perform a home inventory check before agreeing to any new policy. This is the only way that you can be sure that you are getting a fair amount back in the event of loss.

Unfortunately, many people learn this the hard way after losing everything they have in a fire or a storm. They underestimate the total cost of their everyday things. Not only does taking inventory of your home contents help you realize the full cost of your livelihood, but it can also make the claims process much easier.

When providing a list of home possessions to the insurance company, be sure to include photographs, videotapes, receipts and any contracts that point to you as the sole owner of the property.

Remember, some of your home items are easily worth thousands of dollars. Do you really want to take a risk of having a claim on a $2,000 HD TV unpaid because you failed to compile enough evidence?

Replacement Cost versus Actual Cash Value

Lastly, learn the difference between a home’s replacement cost and actual cash value. Traditional full coverage contracts usually insure the home for up to 40% of the total policy. For example, if you insured your home for $100,000 on your policy, then the contents would be insured up to a limit of $40,000. Is this really enough?

personal property contentsIf you have many high-priced furnishings or electronic appliances inside your home, have you really calculated the total receipts and found that a traditional policy covers the cost? Replacement cost means that you can go out today and buy a brand new version of the item, like your HDTV, without worrying that yours had depreciated in value and was only worth $1,500 when it was destroyed.

Actual cash value is a bit different. This refers to an item’s replacement cost but minus market depreciation. For example, if a thief steals your TV set then your claim will be paid. However, if that claim is according to actual cash value, all you get is the price of your old TV set as determined by the current market.

Replacement cost, on the other hand, will replace your TV with a newer set that is similar (but not exactly the same) as the original appliance. If you are especially worried about losing your valuables, then opt for a guaranteed replacement policy; this one has no percentage limits.

Finding the Best Personal Property Home Insurance

Your home and belongings are too valuable to lose! Protect your things and your family’s peace of mind by buying homeowners insurance. You can use our FREE web comparison tool right now and find a homeowners policy that fits your spending style.

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