Personal Property Insurance Coverage: Personal properties are those things you own — furniture, electronics and clothing, for instance. Whether you own a home or rent an apartment, insurance policies typically cover personal property.
This type of coverage helps pay so you could repair or replace your belongings after a covered loss, such as theft or fire.
To make sure your possessions are insured, you need to know how to secure a personal property coverage—and how to make sure your coverage is enough to replace your possessions. See how to choose an insurance company and get the personal property coverage that you need.
What is Personal Property Insurance Coverage?
Personal property insurance coverage is insurance that covers the things you own. Normally, personal property insurance covers things such as your furniture, your electronics, and other belongings in your home or apartment.
While most policies provide ample coverage for the things that you own, policies also have limitations. For instance, your insurance may cover jewelry—but only up to a certain dollar limit.
If you have a very expensive engagement ring or family heirloom jewelry, or even some musical instruments, you will need an add-on or rider to a standard policy to secure coverage.
Also, if you have an expensive fine art collection, lots of first edition books, or certain types of precious metals such as a bunch of gold and silver coins in your home, a really standard personal property insurance policy will not provide full coverage for these especially valuable items.
Personal Property Insurance is Often Part of Your Renter’s Insurance or Homeowner’s Insurance
Most people do not have to buy a separate personal property insurance policy. Instead, they purchase coverage for their possessions when they buy homeowner’s insurance or renter’s insurance.
Protection for personal property is one of two basic types of coverage that is included in a homeowners insurance policy or a rental insurance policy. The other is liability protection, which provides coverage in case someone sues you to court.
You need to purchase your own renter’s insurance—with personal property insurance—even if you live in a property with a landlord that is already insured.
That is because the landlord’s policy will over cover the structure of the home, such as paying to rebuild the building but will not provide coverage for your possessions in the apartment if something should happen.
Personal Property Insurance Doesn’t Just Cover Problems in Your Home
Even though personal property insurance is sold as part of renter’s or homeowner’s insurance coverage, that does not mean that coverage is available only if something happens to your possessions inside your home.
You will also be covered if something happens to your personal property anywhere you are. If you are on vacation and your engagement ring is stolen in a mugging or if your laptop is stolen from vehicle, your insurance should cover you for the losses, so you will be able to recoup the money for personal property replacement.
What Does Personal Property Insurance Protect Against?
The protections available to you when you buy a personal property insurance policy or contents insurance policy will differ depending on the kind of policy and optional coverage you bought. Policies are broadly divided into two types:
- Open peril policies which cover a broad range of problems that could arise and could lead to loss of your possessions or damage to your personal property.
- Named peril policies which provide coverage for specific things identified in the policy. If your property is lost or damaged because of a disaster not mentioned in the policy, you will not get coverage.
In normal situations, your personal property insurance policy will protect you when there’s weather damage, damage from vandalism, damage due to theft, electrical damage, smoke damage, and some kinds of water-related damage. Which ever way, policies typically have exclusions.
For instance, your standard homeowner’s or renter’s policy will usually exclude damage caused by a flood so you would need separate flood insurance. Make sure that you carefully read your insurance information and understand your coverage amount to make sure you have all the protection you need.
Purchasing a Personal Property Insurance Policy
When you shop for a personal property insurance policy, you will need to determine:
- How much coverage you will need
- Whether you want a market value policy or a replacement value policy
- How high your deductible will be
How Much Coverage Do You Need?
Trying to determine the amount of coverage you need can be complicated since it is difficult to know how much it would cost to fix or replace all of your personal possessions in the event of a disaster.
To simplify the process of getting covered, many insurers offer coverage based on a particular percentage of the dollar amount value of your property.
When a percentage-based formula is followed, insurers typically provide coverage for between 20% and 50% of the coverage limit on your home. However, if you have a lot of really valuable possessions, you may need to talk with your insurer about getting a higher amount of protection.
Do You Want a Market Value Policy or a Replacement Value Policy?
To decide between a market value policy or a replacement cost coverage policy, you will have to understand the kind of coverage and covered loss that each of these policies will offer.
If you get a market value policy and your possessions are damaged, lost, or destroyed, your insurance would pay out based on the market value of your possessions.
Replacement value coverage makes sure you have the money that you need to replace the possessions that are lost or damaged.
A replacement value policy is usually more expensive than a market value policy, but you may be better off getting replacement value coverage so you will not find yourself with too little money to replace your possessions if something should happens.
What Deductible Should You Have?
Finally, you need to be careful in your thoughts about your deductible. The deductible is the amount you have to pay before the insurer starts paying.
A policy that has a higher deductible will be cheaper, but you would have to pay more if a tragedy happened. In a case that fire that destroyed $10,000 worth of your possessions and you had a $2,500 deductible, you will only receive a payout from the insurer of $7,500 and would need to pay the remaining $2,500 out-of-pocket.
It can be really difficult to come up with this money after a tragedy. A lower deductible policy means paying higher premiums to have more coverage. But, you will not have to worry about paying for repair or replacement of your possessions when disaster strikes.
If you do not have personal property coverage, you will be taking a serious risk unless you can afford to replace everything you own.
Policies are really affordable and can be easily purchased as part of your homeowner’s insurance or renter’s insurance and sometimes as part of condo insurance. Check around for coverage in your zip code so you’d find a policy from a trusted insurance company that provides the comprehensive insurance you need.