Take a moment to look around your home – what do you own? Mentally, add up values for the items in just the room you are in right now. Imagine if your home suffered a fire and you lost everything in this space. If you had to go to the store to repurchase each item, how much would it cost you? It’s quite shocking when you start to add up the figures for everything from every DVD you own to the furniture. Do you have enough personal property protection through your home insurance to cover all of this? Let’s take a closer look at that.
What Section C Provides
If you haven’t done so yet, take a look at Section C – Personal Property of your home insurance policy states. This is where you’ll learn how much your insurer will pay you if you lose items due to a covered loss. If you haven’t updated this amount in some time, now may be the best time to do so to ensure you have the proper level of protection present.
How Much Is Covered?
Your first step is to ensure you understand your home insurance policy. The default Personal Property coverage amount is a percentage of what you insure your home for. It could be as low as 50 percent of Coverage A, or as high as 80%. Regardless of what is included, you can always opt to increase that amount if it isn’t sufficient.
For example, if you have a home with $200,000 worth of structural protection (under Coverage A). The standard personal property coverage, then, would be $100,000, or 50 percent of Coverage A. If your policy included 80% coverage, you would have $160,000 of coverage. If you have questions, ask your agent what amount of coverage C your policy includes.
So How Much is Enough?
In that example, $100,000 seems like a significant amount of money. However, it may not be as much as you think. Again, you need to base this on your home’s specific value. What do you have in your home? How much is it worth?
To determine this, conduct a home inventory. Work through your home, room-by-room. Take a photo of each item, document its expected worth if you need to replace it, and then add those values up.
Replacement Cost Coverage
Another option is to opt for Replacement Cost Coverage for your personal property. With out Replacement Cost Coverage, you would be reimbursed for the actual cash value, which considers depreciation. That laptop you bought three years ago for $1,000 may only be worth $400 now. The policy pays you $400 in this example. Replacement cost coverage would pay you enough to replace that laptop based on the cost of a comparable model today, which would be closer to the $1,000 range.
What Your Policy Doesn’t Cover
It’s also important to consider things your policy probably does not cover or items that have limits. You can learn more about these limits by reading your Special Limits documentation in your policy. For example, most policies do not cover more than $200 worth of cash, precious metals or coins on your property. They limit your coverage of watercraft to $1,500. Policies typically only give you $1,500 for theft claims for jewelry, furs, and gems and up to $2,500 for theft of silverware or other high-valued ware products. Limitations apply to electronics, firearms, trailers, and much more.
So, how much personal property insurance do you need? It’s important to work closely with your team at Luxor Insurance to gain a bit more insight into how to protect your home from these risks. Keep in mind it is possible to protect nearly all of your belongings up to their actual or replacement value through endorsements or updates to your policy.