What is home contents insurance?
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- Home insurance refers to the coverage of personal property in a home insurance policy.
- It covers you if the contents of your home are lost, damaged or stolen.
- Certain items like specialty jewelry, fine art, and high-end electronics require additional coverage.
- Check out the insider’s guide to the best home insurance companies.
Home insurance protects your home and personal property from damage. Home insurance has three main components: home coverage, personal property coverage and liability coverage. Personal property coverage is sometimes also referred to as home contents insurance.
What is home insurance?
Home insurance, or personal property coverage, protects your personal effects and furniture from damage due to covered events, known as insurance risks. A peril is an event that can damage your home or property. Common insurance risks include: theft, fire, lightning, hail and vandalism.
There are limits to standard personal property coverage depending on your policy and insurance company, typically $ 100,000.
Specialty items are excluded and require additional coverage
If damage to your personal property is caused by earthquakes, floods, government foreclosures, mudslides, updated ordinances, sewer backups and sinkholes, these risks are not covered by home insurance. They will require additional or separate coverage.
Specialty items such as high-end electronics, specialty jewelry, furs, fine art, guns, specialty bikes, and cash may not be covered by home theft insurance. According to Steve Wilson, senior underwriting manager at Hippo Insurance, these items may require a “personal item” endorsement or supplemental endorsement.
For specialized jewelry, you can take out a floating policy in addition to your home insurance. Another option is to purchase self-contained personal jewelry insurance. Your jewelry and artwork should be appraised before purchasing a floating or standalone font.
It is a good idea to take an inventory of your furniture and personal effects. Some home insurance companies will have inventory lists to fill out. If you have riders for fine art and specialty jewelry, you will need to catalog them and provide ratings for them.
Actual cash value versus replacement cost
Home insurance policies generally use “replacement cost” when paying for covered damage. Replacement cost is the cost of replacing the item with a new or used product.
The actual cash surrender value (ACV) takes into account the depreciation of the item. For example, if a five-year-old leather sofa is damaged by fire, the actual dollar value takes into account the age of the sofa. The actual cash surrender value is usually less than the replacement value.
Flood insurance policies generally use the actual cash value, but you can pay extra to use the replacement cost. Check with your home insurance what is used. Some suppliers offer a “guaranteed replacement cost” as a benefit.
For specialty jewelry and fine art, you will be covered for appraised value less any deductible.
How to file a claim if the contents of your home are damaged or stolen
Treat stolen or damaged goods like a car accident and follow these steps to report and file a claim.
- Notify the police and file a police report if it is theft. Your insurance company may request a copy of the police report.
- Take pictures of damaged property and what caused the damage (fire, storm, etc.).
- Contact your home insurance company. Failure to timely notify your insurance provider may result in denial of the claim.
- If the damage is due to an earthquake, flood or mudslide, contact this insurer.