Most homeowners insurance covers the contents of your home in addition to the structure itself. This contents coverage generally even extends to protect your belongings if they are lost or damaged outside of the home, such as while traveling or left in a vehicle. However, not all of your personal property is automatically covered by homeowners insurance, and your most valuable items may be the ones that receive the least protection. If you have valuable belongings like jewelry or rare collectibles, it's important to make sure that those belongings are covered at their actual value.
Insurance Doesn't Always Cover Valuables
Because homeowners insurance companies cannot reasonably expect to know the value of every single item in your house, a blanket figure is assigned toward the contents of your house. In general, the limit for contents coverage is between 50-70% of your home's total value.
For many people, this estimate works just fine. In some cases, however, it's not sufficient to cover the full value of your items. There are many reasons this might happen. You may have an inexpensive home filled with pricey electronics and furniture. You may have a large quantity of antiques, collectibles or jewelry. Or your home may contain items that are not automatically covered under all homeowners policies. In any case, you'll want to check your insurance policy to see exactly what is covered and establish protection for any items that are not already insured.
Here are a handful of items that are commonly uninsured or insured at a low value under standard homeowners policies:
- High-end electronics
- Musical instruments
- Original artwork
- Coins, foreign currency and any other cash money
- Collectible stamps and papers
- Other collectibles, like comics, baseball cards, autographs etc.
If you have any of these items in your home, it might be a good idea to obtain additional protection for them or at least confirm whether they're covered under your homeowners policy. You should never assume that an item is covered; you may be unpleasantly surprised to discover that it's not.
The first step to checking your insurance coverage is to look at your policy declaration's page. Contents coverage is often listed on the policy as "Coverage C." Check whether the limit of that coverage is established as a percentage of your home's value or as a flat figure.
Also check to see whether there are any listed exclusions. For example, some insurance companies do not include guns and jewelry, or may cover them up to only a small amount. You may have a $10,000 limit for contents on your home, but only $2,000 of that could be applied toward guns. Your policy declarations page should detail this information.
If you're not sure what's covered or have trouble understanding the information laid out on your policy, you should approach your insurance agent or the customer service department of your company. The representative can go over your belongings with you to determine what valuables may need additional coverage and how the cost of your policy might change.
Even if your belongings are covered under your homeowners policy for most perils, there may be some exceptions that will leave your possessions unprotected. For example, items damaged in a flood or earthquake will not be covered under most standard homeowners policies. Specialized flood and earthquake insurance is available, but these policies don't always cover personal belongings.
Some insurance policies may place different limits on theft claims than other types of losses. It's important to check with your insurer to confirm exactly what is covered and what limitations may apply.
Obtaining Coverage for Your Belongings
Once you've determined that your current coverage is insufficient, you can talk to your insurer about adding a Scheduled Personal Property policy to your insurance. These SPP policies are sub-policies of your main homeowners insurance, and each one is designed to protect a specific valuable. For example, you might take out an SPP for your wedding ring, one for the painting in your living room and one for your baseball card collection.
Each policy will have its own premium, which will be added to the overall cost of your insurance. In general, SPP policies are fairly affordable, but the cost will depend on the value of the insured item.
When the policy is established, your insurance company will need to assess the value of the individual item or collection being insured. This will require an appraisal from a professional. Once the items are appraised, that value estimate is the amount of the policy. If the item is lost, stolen or damaged in a covered peril, you will be reimbursed the amount of the appraisal minus any deductibles and depreciation you might owe.
You should take similar steps to ensure that personal property is included in your flood, earthquake, wind or other specialized insurance. In most cases, you should be able to add a personal property rider if coverage is not automatically available.
Know Your Coverage
It's always important to take the time to understand exactly what your insurance covers and why you pay what you do. If you're uncertain about whether anything in your home is protected, check with your insurer. Together, you can modify your plan to create the level of coverage that's most comfortable for your needs so that you never face an unwelcome surprise.