UPDATED: Aug 20, 2013
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Homeowners insurance, unsurprisingly, covers damage to a person’s home. What you might not know is that most policies also cover the loss or damage of personal belongings through “personal property” or “contents” coverage. This coverage pays for furniture, clothing, appliances, and other items whenever they sustain damage as part of a covered loss.
For example, personal property coverage would pay for items that are stolen during a home break-in; it would also cover damages sustained by furniture and other property during a house fire.
Not every homeowner’s policy includes coverage for contents. The most basic types of insurance pay only for damages to the dwelling itself. As you purchase additional coverages for your policy, the protection you receive will expand. On your homeowner’s policy, content’s coverage is listed as Coverage C.
Perils for Personal Belongings
Depending on the details of your policy, your personal property may be covered for different perils than those listed on your dwelling coverage. In other words, just because your insurance would pay for repairs to your home after being struck by a vehicle does not mean that they will also pay for your damaged furniture from the same accident.
It’s a good idea to check with your insurance company to determine what perils might be listed on your “contents” coverage. The policy will generally be based on an inclusion or exclusion format. The former means any peril that is covered will be listed in the policy, while the latter means that all perils are covered unless explicitly stated in the policy. This is equally true of all coverages on your homeowner’s policy, so it’s often best to keep things simple and carry the same level of coverage for your dwelling, contents and structures.
One important thing to remember about your personal property protection is that it pays for the loss or damage of your belongings even if those items are not stored in your house at the time. For example, if you’re on vacation and your luggage is stolen, you can usually file a claim under your contents coverage. No matter where you are, your personal property can be protected by your homeowner’s insurance as long as you have Coverage C on the policy and the loss was caused by a covered peril.
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How Much Does Personal Property Coverage Cost?
Personal property insurance is fairly inexpensive, but the final cost will depend on the replacement value of the items that you own. In general, an insurance company will insure up to 70% of your home’s total value in belongings. This means that if your home is worth $500,000, the most your insurance company will insure your personal property is $350,000.
If you have any particularly valuable items, such as jewelry or antiques, you will need to use a different type of coverage to insure those items. This coverage is called a “scheduled personal property” or SPP policy, and it insures items at their appraised value. You can only have one item or collection per SPP policy, but you can carry as many SPP policies as necessary.