How Much Personal Property Coverage Do You Need?

 By Catherine Powell

Image courtesy Pixabay

I just finished reading a newsfeed about a man in Tennessee who returned from work only to find that his home had washed away when 17-inches of rain fell in 24-hours.  The only good thing was that he wasn’t inside his home when the flood destroyed it.  I can only hope he had sufficient insurance to cover the loss of his property and belongings.  With that in mind, I thought I’d dedicate this week’s blog to helping everyone determine how much personal property coverage they need. 

How do you put a price on the stuff you own? If it was possible to pick your home up, turn it upside down, and shake it, what would come tumbling out?  That’s what you need to think about when your insurance agent asks you how much content coverage you need.  While it’s relatively easy to put a value on your home, trying to figure out the value of all that’s inside it can be maddeningly difficult.  That’s because most homes are stuffed full of furnishings, appliances, electronics, clothing, bedding, linens, kitchenware, jewelry, decorations, fitness equipment, and more.  Should you come home to find your dwelling has been destroyed by a tornado or burnt to the ground by a fire, what would it cost you to replace your home’s contents?  Get it right and you’ll be able to make yourself whole again.  Get it wrong and you could find it difficult to bounce back were disaster to strike.

How much personal property coverage is included in your policy?  While personal property coverage is included in most homeowner’s policies, the percentage of content coverage can range from 20-70% of a home’s value.  While this means a homeowner’s policy that includes $500,000 in property coverage may include $100,000 - $350,000 personal property coverage, the question is whether the amount is sufficient to cover everything you own?

How can you determine how much coverage you need? The only way to get an accurate amount is to go through your home and inventory your possessions.  Start in the living room and make a list of everything you see.  This includes opening the drawers and cabinet doors.  Then move onto the dining room, the kitchen, bedrooms, bathrooms, the garage, and basement if your home has one.  If you have a covered porch or garden shed, make sure you inventory everything contained therein.  The same goes for your backyard patio or deck.    Once you’ve created a complete a list of your possessions, now it’s time to assign values to each and every piece.

Does your policy stipulate actual cash value or replacement cost? The difference can be significant.  While the LCD TV in your living room may have set you back $1,000 when you bought it five years ago, the cash value could be half that today.  A cash value policy factors depreciation into the equation.  This makes it more difficult for you to assess the amount of personal property coverage you need, since the numbers change over time.  It’s much easier to determine what it would cost to replace everything you own if you have a replacement cost policy. 

Use a calculator to add up the value of your valuables.  Once you’ve inventoried your possessions, it shouldn’t be all that hard to determine the total value.  Most people learn they underestimated the estimated value of their possessions.  This isn’t a problem, provided the amount of personal property coverage included on your policy meets or exceeds the total value on your inventory sheet.  If you find that your existing limit is inadequate, you should call your insurance agent to ask for an increase in the amount of personal property coverage.

Can you increase the limits on your personal property coverage? It’s usually a simple matter to increase the personal property limits by adding an endorsement to your policy.   If your insurer doesn’t allow you to add an endorsement, you can purchase an umbrella policy that offers $1,000,000 or more in additional coverage.  The trick to making either of these options worthwhile is to have an accurate estimate of the actual value of your possessions, since an insurer will only pay you up to the replacement value.  Carry too high of a limit and you’ll pay a higher premium without the receiving any added value.

What kind of items may not be covered by my policy? Specialty items such as fine art, furs, expensive jewelry, collectibles, firearms, and cash may not be covered under your existing policy.  If you own valuable jewelry, priceless antiques and artwork, or expensive collectibles, you’ll need to make sure you have these items appraised before you list them on your inventory.  Then you’ll need to call your agent to find out how much it would cost to add a rider to cover these high-value items.

What does it take to file a claim if your belongings are lost, damaged, or stolen?  Whether your home was a total loss or not, filing a personal property claim is fairly straightforward.  If the cause of the loss was fire or theft, you’ll first need to file a report with the police or fire department, since your insurance company will want to verify how the loss occurred.  You’ll also need to take photos of the damaged items as well as noting what caused the loss, such as fire, theft, or storm damage.  Make sure you don’t delay in reporting the loss to your insurance company, since failing to notify an insurer in a timely manner can result in delaying or denying your claim.  If multiple items were damaged or destroyed, you should list them separately along with their age, cost, and place of purchase if possible.  Failing that, list where the item can be replaced, along with the cost to replace it.  Make sure your description of the items lost is as detailed as possible, since this will help you get the highest value for them.

Once you submit a claim, the insurance company will send you paperwork that you’ll need to complete.  You’re also required to produce evidence to support your claim.  After the paperwork is filed, you’ll be contacted by the adjuster.  He or she will determine the amount reimbursed based on your policy and the assessed value of the item.  If the adjuster offers you less than you hoped for an item, this doesn’t mean the insurer is trying to short you.  It could mean that the value of item costs less to replace today than it did when you originally purchased it.  Or it could mean that the depreciated value of an item is less than the replacement value if your policy is based on the actual cash value instead of the replacement cost. 

Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida.  To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com/