The things inside your home are valuable to you. Personal property insurance exists to make sure items in your home are covered in case you ever need to replace them.
You may be wondering if this type of insurance is necessary. Personal property insurance can give you peace of mind if replacing the possessions inside your home would cost more than you could reasonably manage in a scenario where they are lost or damaged.
Have you ever worried that your engagement ring could be taken during a robbery? Does losing thousands of dollars in electronic devices in the event of a fire worry you? Then it may be worth paying a few extra dollars every month for coverage. This is especially true f you keep valuable possessions like jewelry, art, or pricey electronics inside your home.
What Does Personal Property Insurance Cover?
Personal property insurance covers items in your home that have value.
This type of coverage may sound like something that only people who keep flashy jewels or expensive paintings in their homes would need. However, it is actually designed to protect everyday people from having to cover the costs of damaged or stolen items.
Not sure what you’ll need to cover? The insurance company will usually ask you to make a list of the items you own when you sign up for a policy. This ensures the policy has the coverage you need.
What are some of the items in your home you might need to replace in the event of a disaster? Here’s a look at some of the basic items that most policies cover:
- Furniture
- Appliances
- Dishes
- Silverware
- Cookware
- Linens
- Computers
- Electronics
- Tools
- Clothing
- Furs
- Fitness equipment
- Guns
- Cash
It’s important to remember that specific policies vary when it comes to what is covered. What can you do if you own items that you don’t see featured on any basic coverage lists as you shop around for quotes? You may be able to purchase extended policies to cover specialty items that aren’t covered under a basic policy.
What About Homeowner’s or Renter’s Insurance?
What if you already have homeowner’s or renter’s insurance? Here’s what you need to know:
Renter’s Insurance
This type of insurance basically is a type of personal property insurance. It doesn’t cover the building you live in, since you don’t own that building. But it covers your property. So if a fire damaged your apartment building, renter’s insurance would cover your property. If you’re a renter, you definitely need this type of insurance!
When you have renter’s insurance, you probably don’t need additional property coverage, unless you run into one of the situations we’ll consider in a moment.
Homeowner’s Insurance
While homeowner’s insurance policies are primarily about covering your dwelling and other properties on your structure, they’ll also cover your personal property. The tricky thing, though, is determining whether or not you have enough personal property insurance through your homeowner’s policy.
There are a few different things to consider when it comes to both renter’s and homeowner’s insurance policies, including:
What Type of Coverage Do You Have?
Personal property protection comes in a couple of different forms: replacement value and actual value. You might also see actual value as cash value, appraised value, or market value. This is a key distinction!
Say you have a 10-year-old couch that you bought new for $1,500. After ten years of living (especially if you have kids or pets!), it’s probably significantly less. Say you could list it on Craigslist now for about $250.
A replacement value policy would give you $1,500 or more, depending on today’s market, to buy a brand new couch like the one you lost. But a market value policy would give you $250. For one single item, the difference may not be earth-shattering. But if you’re talking about every piece of property you own, the difference can be monumental.
So, first, you need to be sure your homeowner’s insurance policy covers replacement value for your personal property.
Which Items are Covered?
You’ll also want to examine your existing insurance policies to see which items or types of items are covered. Chances are there will be some exclusions involved.
For instance, your policy might explicitly state that it won’t cover a piece of jewelry appraised at more than $5,000 in value. Or it could exclude certain types of artwork and antiques.
Not sure what your insurance would or would not cover? Review your policy and talk to an insurance agent!
If your policy excludes or doesn’t fully cover certain items you know you need to have insured, you may need an additional personal property insurance policy.
How Much Total Coverage Do You Have?
Determining just how much coverage you need for your personal property is tough. You probably don’t know exactly what it would cost to replace everything you own. But you need to try to guess when you’re setting up your insurance policy.
This is a good exercise, anyway, since in the event of a fire or other disaster you’ll need to have a list of all the property you need to replace in your home. Take a Saturday, and go through your house with a pen and paper. Write down everything you own–right down to your jogging shoes and favorite chef’s knife. Then, guesstimate what it would cost to replace those items with new ones.
Once you get through this exhaustive list, you’ll quickly see that a standard $100,000 of personal property coverage may not be nearly enough, even for the minimalists among us. You’ve probably accumulated a lot of stuff over the years!
Once you know about how much total coverage you need, check your existing insurance policies. If they don’t cover you, you’ll need to either bump up your coverage or add an additional personal property insurance policy.
Adding Personal Property Insurance
For most of us, personal property insurance will be something we have in addition to rather than instead of homeowner’s insurance or renter’s insurance. You might add this insurance as a rider on your current insurance policy. Or it could be more cost-effective to get an additional policy to have besides your existing insurance.
Types of Personal Property Insurance
For the most part, insurance companies will package general personal property insurance with renter’s insurance or homeowner’s insurance policies. So this is where you’ll want to start when shopping around for these policies.
You can typically customize your personal property coverage when you take out or change your insurance coverage. With your homeowner’s insurance, the property portion of the coverage may be called “contents coverage” because it covers the contents of your home.
However, if you need specific coverage for particular pieces of valuable property, you can purchase this coverage separately. Some companies also allow for you to purchase this type of policy as a rider on your existing insurance policy.
When you’re shopping around for broad property insurance, start with your current insurance company. Increasing your coverage may be more affordable than you’d think! But you can look at any of the insurers below for coverage for specific valuable items.
The Companies With the Best Rates
Personal property insurance can be purchased from companies that offer regular homeowner’s insurance. You’re not always comparing apples to apples when looking at policies from different companies, though.
Rate differences are common because policies vary so widely when it comes to the types of items they cover. Your exact location will also be a big factor regarding the rate you get.
However, some companies are known for consistently offering very affordable and reasonable policy rates. The property claims satisfaction scores for 2017, released by J.D. Power, are a great place to start your search.
Here’s a look at the top five companies last year, ranked in order based on both customer satisfaction and price:
- Amica
- The Hanover
- USAA
- Nationwide
- Encompass
Amica ran circles around the competition when it came to receiving high scores for satisfying customers in all categories. The Hanover, USAA, and Nationwide also came in leaps and bounds ahead of their competitors in the very crowded marketplace of property insurance.
It’s worth getting a quote from at least a few of these highly-rated companies to see if just paying a few extra dollars per month could help you have peace of mind. Or, again, you can call your existing renter’s or homeowner’s insurance company to get a quote for additional coverage.
The Bottom Line on Private Property Insurance
You should never acquire personal property insurance just as a formality. Your personal property insurance policy should be, well, extremely personal.
The truth is that signing up for a policy that doesn’t cover the things you’ll actually need to replace is just a waste of money. However, working with an agent to find a policy — and potentially customize your coverage to make sure you have the level of protection you need is important. The best piece of advice to follow when purchasing personal property insurance is to never assume that something is covered without seeing it in writing.
It may also be necessary to purchase coverage that goes above and beyond what a standard policy offers if you have rare or unusual items in your home that hold high monetary values. This is why it’s so important to scrutinize any policy before signing on the dotted line. The best strategy is to work directly with an agent to find or create a policy that covers exactly what you need.
Topics: InsuranceThe post What Is Personal Property Insurance (and How Much Do You Need?) appeared first on The Dough Roller.
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