Personal Property Insurance – What is it and How do you Get It?
Did you know that your homeowner’s insurance policy may not cover all of your personal belongings? Anything of value may be excluded. It’s important to read the fine print on your policy. What does your policy cover? Do you need additional riders to protect your belongings in the face of complete disaster?
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Keep reading to learn about personal property insurance and how it may help you.
What is Personal Property Insurance?
Another name for personal property insurance is contents insurance. It covers the contents of your home. It can pertain to homeowners and renters whose current insurance policy doesn’t protect the contents of his or her home well enough.
Personal property insurance covers things like:
- Dishes and glasses
- Sporting goods
Personal property insurance basically covers everything inside your home that isn’t a part of the home.
Personal Property Insurance is a Part of your Policy
Your homeowner’s insurance includes your personal property insurance. You won’t pay a separate fee for it. You should know what percentage of the building’s dwelling your insurance policy covers personal property, though.
Once you know the percentage, which is usually between 40% – 50% of the building’s dwelling value, you can determine if it’s enough.
How do you know if it’s enough? Take a home inventory. Figure out how much you have invested in your belongings. Walk around each room, take pictures, and make a list of everything that you own. If you know an approximate value for each item, record that too. If you know the exact value, make sure you record it. Then tally up the amount of your belongings. Does the total exceed the amount of coverage provided? If so, you may need Scheduled Personal Property Insurance.
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Scheduled Personal Property Insurance
Scheduled personal property insurance is optional coverage. You typically need it for specific high-value items that exceed your coverage. The most common items include expensive jewelry or antiques. The policy will require a current appraisal to prove the item’s value to ensure that you have adequate coverage.
Actual Cash Value or Replacement Value
You will also need to decide what type of coverage you want. Actual cash value pays you back the value of the items minus depreciation. Any items that you’ve had for many years may not have as high of a payback value that you’d expect.
Replacement Cost Value, on the other hand, pays you back the amount it would cost to replace the item today. Many people opt for this version for very expensive purchases or those that they know will depreciate quite a bit. The difference in premium typically isn’t that much, but the payout can be vastly different.
Know the Perils
Every insurance policy is different. Some cover personal belongings loss for all perils, while others only cover certain perils. Know what your policy covers and decide if it’s enough. If you have a ‘named peril’ policy, make sure the most common perils in your area are listed.
You may have an open peril policy too. These policies cover pretty much every peril except the ones that it specifically lists as exclusions. Again, make sure you read the fine print so that you know exactly what to expect out of your policy. You don’t want to find out after something happens that it’s not covered by your insurance.
How to Get Personal Property Insurance
Most homeowner’s insurance policies include coverage for personal property. It’s up to you to see how much coverage is offered and what it covers. If you don’t like the coverage, you have the option to purchase additional personal property coverage for specific items.
Talk with your insurance agent about your personal property coverage. Think about the value of your belongings and how much you are willing to pay to protect it. If you have extreme valuables, make sure that you purchase an additional rider that ensures enough coverage in the face of total loss.
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