The inside of your home is filled with items you have acquired over the years. It might not break the bank to replace one or two of them at a time, but it could cost tens of thousands of dollars to replace all of them at once. Having personal property insurance means you don’t have to get stuck with the bill. Of course, having the right limits and types of coverage are an important part of protecting yourself against a major loss. Continue reading to learn how you can calculate your actual coverage needs and make important improvements to your personal property coverage in 2018.
Take Inventory of Your Home
To calculate your personal property coverage needs, you have to know how much your belongings are actually worth. The only way to accurately calculate the value of your possessions is by taking inventory of your home. If you already have a home inventory, congratulations. You have taken an important step in protecting your belongings against loss. In that case, January is a great time to update it with all the new toys and gifts you received during the holiday season. If you do not have a home inventory, there is no time like the present to create one. Not only can it help you calculate your coverage needs, but it can also improve the claims process after a loss.
The Insurance Information Institute suggests downloading an app that can help you record, organize, and store your list of belongings. Start by going through your home one room at a time, listing everything you see. Be sure to look under furniture and inside cabinets and drawers. Don’t leave out the items you keep in your garage, attic, storage building, or car. Personal property coverage typically extends to nearly everything you own that isn’t a part of your home’s structure.
After you record all of your belongings, take time to document those items with photos of your belongings or pictures of your purchase receipt or appraisals. You should also write down any serial numbers you may have.
Review Your Coverage
You probably already have personal property coverage if you have a renters, homeowners, or condo-owners insurance policy. All three typically cover personal belongings, although at different amounts. With renters and condo insurance, you may be able to choose an amount that works for you. With a standard homeowners insurance policy, the insurance company may provide a pre-determined coverage amount by default. This is usually equal to 50 percent of the total structural limit found in Coverage A of the policy. If you believe your coverage is too low, contact an agent here at Carrigan Insurance to request higher limits.
As you review your total coverage limit, take time to also glance at your ‘special coverage’ limits, too. These lesser-known limits can hamper the value of your loss settlement if you own several high-value items. For example, the special coverage limit for jewelry is usually set at $1,500. If your jewelry is worth more, you could be out-of-pocket for the remaining loss. To avoid this type of situation, talk to an independent agent at our office about how you can schedule additional coverage for specific, high-value items in your home.
Finally, consider adding a replacement value endorsement to your coverage if you do not already have replacement value coverage for your belongings. Most standard policies only cover the actual cash value of personal property, which significantly detracts due to depreciation. If you also consider the cost of the deductible, it could mean a much lower settlement than you expected. With replacement value coverage, you receive compensation for the full cost of replacing your items with new ones – minus your deductible. It is a small change that could result in big savings.