If you are resolving to be smarter or more organized with your finances in 2018, having the right insurance is a big part of that objective. In this month’s post, we’re zeroing in on an often overlooked feature of homeowners, renters, and condo-owners insurance: Personal property coverage.
What is Personal Property Protection?
If you own things, you need personal property coverage. This type of insurance protection helps you recover the loss of your belongings after a covered event. Examples include clothing, furniture, small appliances, electronics, and more. Given that the gift-giving season is not too far behind us, this is the time of year when updating your personal property coverage and limits perhaps makes the most sense.
If you have a standard homeowners insurance policy, you probably already have this protection included under Section C of your policy. Usually, the insurance company sets personal property limits at an amount equal to 50 percent of the Coverage A limit for the structure of your home. There are also additional limitations known as ‘special coverage’ limits that cap the amount payable for certain categories of items, such as firearms, cash, securities, jewelry, precious metals, watercraft, and more.
While the standard coverage limits are a good start for many homeowners, it may also fall short of providing adequate coverage for others. Not to mention, renters and condo insurance do not typically have default personal property limits, instead leaving it to the policy-holder to determine how much coverage to purchase. For those reasons, we here at Wolfgram Insurance recommend taking inventory of your home and updating it periodically to assure you know exactly how much coverage you really need.
A home inventory is exactly what it sounds like – documentation of every item in your home. It may not sound fun – especially if you have accumulated a lot of things over the years – but it can help you in more ways than one. First, it provides an easier calculation of your actual coverage needs, including any scheduled coverage for high-value items that exceed special coverage limits. Second, it facilitates a much easier claims process in the event of a loss. Finally, it makes it easier to report losses for tax purposes in the event of a fire or other disaster.
The important thing is to document as much as you can, backing up your records with purchase receipts, photos, and serial numbers when possible. You can keep track of items the old-fashioned way with pen and paper, or you can store your data in cloud-based software instead. If you go the pen and paper route, just make sure you keep your inventory list somewhere safe away from home.
If you need to file a claim, you want everything to go as expected – no unwelcome surprises. We recommend reviewing your personal property coverage to understand exactly what would happen if you experience a loss. Typically, the insurance company will assess the damages and value your loss in one of two ways: actual cash value or replacement value. The actual cash value is the depreciated value of your items. This is the coverage that usually comes standard with a homeowners insurance policy. However, we recommend purchasing a replacement value endorsement that assures you receive enough compensation to completely replace your belongings with new ones just like or similar to them. Keep in mind that personal property claims are subject to a deductible, which is an amount you elect to pay out-of-pocket toward the cost of your loss.
If you need to upgrade your personal belongings coverage with higher limits, scheduled coverage, or a replacement value endorsement, there is no better time than now. Contact our office today to request a quote. We look forward to serving you soon.