How does personal property coverage — also known as home contents coverage — work?
Personal property insurance — also known as home contents insurance — is coverage that protects your personal belongings against damage and theft. While the details depend on your specific policy, this part of your homeowners insurance policy generally covers your personal belongings up to your coverage limits for damage or destruction due to a covered loss.
Let’s explore the ins and outs of personal property insurance to ensure the contents of your home are protected.
Your home contents insurance applies to everything you own that resides within the walls of your home or apartment — your clothes, TV and other electronics, furniture, appliances, and so on. What circumstances they are covered against depends on the specifics of your policy.
Most property policies do not cover personal property separately. It’s unlikely you will find an insurance policy to cover just your personal belongings. Your renters, homeowners or condo insurance policy may cover for your liability insurance and your personal property (contents). If you want insurance coverage for your personal property alone, invest in a renters policy (or home or condo).
Home appliances are considered personal property when it comes to insurance coverage designations. As long as your appliance was damaged or destroyed because of a covered peril listed on the policy, insurance will take care of its repair or replacement — the circumstances surrounding the damage sustained by your appliance matters to your insurance company, so it's best to be armed with proof of the peril that caused its state should your insurer inquire.
What appliances will be covered may vary from insurer to insurer, so confirm with the company providing your personal property insurance about which appliances are eligible for coverage. Things that plug-in to an outlet, like a refrigerator or washing machine, are examples of appliances that should be covered. However, appliances that are built-in to your home, like a hot water heater, could be covered by the dwelling portion of your homeowners insurance policy instead.
Wear-and-tear and maintenance and operational issues related to the age of an appliance are never covered by insurance.
Many other systems in your home — including HVAC systems and sump pumps — are not counted as personal possessions, nor are they covered under the dwelling portion of your homeowners coverage. Therefore, if you would like coverage for these oftentimes high-ticket items, you may need to see out equipment breakdown coverage. This add-on coverage is available from most insurers and typically offered a reasonable added premium.
You'll be glad to know that your personal property coverage follows you outside of your home. However, be aware that items kept outside of your residence are often subject to lower coverage limits than those kept at home. This means that such items — like those kept in a storage unit — are likely to be covered, though the limit may be capped at 10% of your dwelling value. Check your policy or contact an agent to see how your insurance company handles items away from home.
Plants, trees, and shrubs are covered under the home contents portion of your homeowners policy. Coverage for these items is typically capped at around $500 per item and does not cover natural deterioration or disease.
For particularly valuable items, such as jewelry and fine art, most companies will restrict the total amount of compensation allowed. This amount is often referred to as a sub-limit, which varies depending on the type of property that you have. Below are the common sub-limits you can expect for a variety of valuables.
Money, gold, coins
Jewelry, watches, furs
If you own an item that exceeds the limitations listed above, consider an endorsement to your personal property insurance. An endorsement exceeds the coverage limit in order to protect a specific kind of property. For example, a jewelry endorsement would raise your coverage limit for all your jewelry. If you have one piece of jewelry that is valuable, such as an engagement ring, you might want to consider a scheduled endorsement. This additional coverage would require an item-by-item appraisal, but is the best way to protect a valuable item.
Protections for electronic devices is included in most homeowners and renters insurance policies. Insurance companies typically place a limit on the amount of coverage available for electronics at around $1,500, though this can vary by company. Some insurers allow you to add an endorsement to increase your coverage level for these items, but you'll want to check with your company.
The following electronic devices are typically covered under most policies:
Under most policies, these items are covered against perils such as power surges, fire, theft, and any other peril listed in your policy documents. Accidental damage is sometimes covered, depending on the type of coverage that you have, but normal wear and tear is almost never covered.
Your renters or homeowners insurance policy may not be the only protection that these items have. Many newer items are still covered by the manufacturer warranty or an extended protection plan offered by many retailers. This often includes mechanical failures and, in some cases, things like broken screens. Getting an extended warranty can go a long way in protecting your goods, but remember that your homeowners or renters insurance can also be useful in certain situations.
Some insurance companies may offer special coverage options for electronics. Progressive, for instance, partners with Worth Ave. Group to provide coverage on electronic devices such as laptops, mobile phones, cameras, and more. This coverage is relatively affordable and typically covers more perils than a standard warranty, including drops, submersion in water, and theft. Unlike warranites, this type of coverage doesn't typically have to be purchased at the same time as your device and can even be added to older devices.
Bear in mind that your deductible will apply, meaning that smaller claims — like a cracked screen on an iPhone — may be worth covering out of pocket.
Your personal property coverage protects against the same perils as your homeowners coverage. As such, if you have more robust coverage, your belongings will be protected against more hazards. While you may need to consult your policy documents for more specific information, the following are general guidelines that can help give you an idea of what sort of perils you will be protected against.
If you have a named peril policy for your personal property, you will have coverage against the following perils:
If your property is damaged by any of the hazards listed above, you would have coverage up to your policy limits. It is called a named-peril policy because all the perils (causes of loss) are specifically listed on your policy.
Another type of coverage for personal property is known as an open peril policy. Here, all the perils that won’t be covered are specifically listed. This coverage is more robust: you only need to prove the excluded perils did not cause the damage.
In an open peril policy, the following hazards are excluded from coverage:
Certain perils will never be covered by insurance companies — regardless if it’s a named or open peril policy. If your contents are damaged or destroyed by the following perils, you will not have insurance coverage:
*You can add flood/hurricane coverage back to your contents by purchasing a flood insurance policy through FEMA and the National Flood Insurance Policy. This will cover your personal property contents up to $100,000. If the value of your contents exceeds this, consider purchasing another private flood insurance policy.
**You can add limited coverage for mold on many standard property insurance policies.
While it can vary from one homeowners insurance policy to another, your property personal coverage is usually set to a percentage of dwelling coverage — usually between 50 and 70% of your dwelling amount. If your dwelling amount is $250,000, your personal property coverage may range from $125,000 to $187,500. Typical renters policies will default to $10,000 to $25,000 in personal property coverage. If you are sharing your renter’s policy with a roommate, you might elect to increase this coverage amount.
You generally have some flexibility for your personal property coverage limit. One way to determine how much coverage you need is to create and maintain a home inventory. This inventory of your possessions can help you keep track of your personal belongings and give you a more accurate picture of how much it will take to replace them.
While it may seem tedious, putting a home inventory together for insurance purposes is crucial if you must file an insurance claim. To do a household inventory, the more thorough you are, the better off you'll be. The last thing you'll want to do if you face after a devastating loss is to try and rehash all of the possessions that you lost. On top of making the claims process much smoother, a comprehensive list can also help you avoid getting a payout that doesn't cover all of your belongings. Follow these guidelines when creating your home inventory list:
While simply listing your items is important, the more detailed that you can be the better. Consider the following when listing your items:
Getting started on your home inventory list can seem overwhelming. One method is to document your personal belongings room by room. Below you'll find an outline of common items found in each room to help get you started.
Compiling a home inventory can be an overwhelming task. Luckily, a collection of mobile apps exist to help you through the process.
The Zebra's recommendations are unbiased; we do not receive a commission from any of the above home inventory apps.
If you're looking for a lower-tech way to keep track of your belongings, give the NAIC's Home Inventory Checklist a try.
Standard personal property insurance coverage will reimburse you for your belongings on an actual cash value basis. Actual cash value, or ACV, means you are reimbursed for what your belongings are currently worth — not what you originally paid for. Replacement cost, on the other hand, will reimburse you based on what it would cost to replace your belongings at the original market value.
If you’re able to, we recommend insuring your personal property contents on a replacement cost basis. While it does increase your premium, you are better compensated for your damaged items.
If you want your contents covered, we recommend you look for renters, homeowners, or a condo insurance policy. This will not only protect your belongings, but also includes liability, the structure of your home, additional living expenses, and other options alongside your contents coverage. For more information on these policies and the amount of coverage that you need, see below.
As you decide on your personal property coverage levels, keep the following tips in mind: