If you own a home, you know that you need to insure it properly. After all, it is likely the most valuable asset you will ever own. However, this does not mean that everything within your home should be overlooked. Many homeowners acquire their coverage without fully understanding what their policy covers and whether it will be enough should they need it. Let’s take a look at everything you need to know to ensure your belongings are insured properly.
How Much Coverage Do You Need?
Because your home’s structure represents the single largest value in case of loss and it is relatively easy to quantify, many homeowners focus the majority of their attention on this portion of their homeowner’s insurance. This is an important consideration. However, it is just as important to consider your belongings as well.
In the event of a loss, would your insurance coverage be able to cover replacing them? It may seem difficult to quantify the value of all of your belongings, but it is crucial to ensure you have the right coverage for both your home and its contents to be able to fully recover if a loss occurs.
Homeowners insurance comes with coverage for personal property such as furniture, clothing, and most other things in your home in case of loss or damage. But in most cases, this coverage will be limited to between 50% to 70% of the coverage on your home’s structure. Unfortunately, in many cases, this will not be enough to replace your belongings. The best way to determine if you may need more coverage is to perform a personal property inventory and take stock of the items you own and how much it would cost if they needed to be replaced.
Scheduled Personal Property Riders
Most homeowner’s policies limit the coverage on specific categories of high-value property such as jewelry, electronics, artwork, antiques, and more to a specified maximum value. This means that if you possess high-value items with a value higher than this, you would only receive the amount up to this limit. In order to receive the full value in the event of a loss, you would need to add a scheduled personal property rider to your policy. This would allow you to raise the limit for certain categories of items or for specified items. In order to add an item to a Scheduled Personal Property Rider, you will need to provide your insurance provider with a receipt or an appraisal to show its value.
Actual Cash Value Vs. Cost of Replacement
A homeowner’s policy will either cover the cost of replacing your belongings or pay for their cash value. When it comes to replacement value coverage, this is exactly what it sounds like. This coverage will cover the cost of replacing your item with a comparable item. This is great if you suffer from a catastrophic loss and need to replace your possessions.
Actual cash value policies will, instead of paying for a replacement, pay you the actual cash value of an item up to the policy limit, accounting for depreciation. This means that you will generally receive less than the amount that it would cost to replace your possessions. These policies generally cost roughly ten percent less than replacement cost coverage, but for most homeowners, this may not be worth the risk of being unable to replace their possessions in the event of a loss.
Your home’s structure may be your single most valuable possession, but it is not the only one. Your personal possessions are equally as important, and it is critical to ensure they are properly protected. The best way to get started is by taking an inventory of what you own and its value.
For help appraising and valuing your possessions, contact the experts at Manzi Appraisers & Restorers. With more than twenty years of experience helping to provide accurate valuations and appraisals for insurance, you can trust us to help create an accurate valuation for your possessions. Call us at 617-948-2577 and connect with us on Facebook.